Intrinsic value of Navigator Holdings - NVGS

Previous Close

$10.00

  Intrinsic Value

$4.43

stock screener

  Rating & Target

str. sell

-56%

  Value-price divergence*

0%

Previous close

$10.00

 
Intrinsic value

$4.43

 
Up/down potential

-56%

 
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 NVGS 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 0.5

 

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, %
  -6.67
  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
  294
  300
  307
  315
  324
  333
  344
  356
  368
  382
  397
  413
  429
  447
  466
  486
  507
  530
  554
  579
  606
  634
  663
  695
  727
  762
  798
  837
  877
  920
  964
Variable operating expenses, $m
 
  178
  182
  186
  192
  197
  204
  211
  218
  226
  235
  244
  254
  265
  276
  288
  300
  314
  328
  343
  359
  375
  393
  411
  431
  451
  473
  495
  519
  544
  571
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
  216
  178
  182
  186
  192
  197
  204
  211
  218
  226
  235
  244
  254
  265
  276
  288
  300
  314
  328
  343
  359
  375
  393
  411
  431
  451
  473
  495
  519
  544
  571
Operating income, $m
  78
  122
  125
  128
  132
  136
  140
  145
  150
  156
  162
  168
  175
  182
  190
  198
  207
  216
  226
  236
  247
  259
  271
  283
  297
  311
  326
  341
  358
  375
  393
EBITDA, $m
  140
  186
  190
  195
  200
  206
  213
  220
  228
  237
  246
  255
  266
  277
  289
  301
  314
  328
  343
  359
  375
  392
  411
  430
  450
  472
  494
  518
  543
  569
  597
Interest expense (income), $m
  30
  30
  31
  32
  32
  33
  34
  36
  37
  38
  40
  41
  43
  45
  47
  49
  51
  53
  55
  58
  61
  64
  67
  70
  73
  77
  80
  84
  88
  93
  97
Earnings before tax, $m
  46
  92
  94
  97
  100
  103
  106
  110
  113
  118
  122
  127
  132
  138
  144
  150
  156
  163
  170
  178
  186
  195
  204
  214
  224
  234
  246
  257
  270
  283
  296
Tax expense, $m
  1
  25
  25
  26
  27
  28
  29
  30
  31
  32
  33
  34
  36
  37
  39
  40
  42
  44
  46
  48
  50
  53
  55
  58
  60
  63
  66
  69
  73
  76
  80
Net income, $m
  45
  67
  69
  71
  73
  75
  77
  80
  83
  86
  89
  93
  97
  101
  105
  109
  114
  119
  124
  130
  136
  142
  149
  156
  163
  171
  179
  188
  197
  206
  216

BALANCE SHEET

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Cash and short-term investments, $m
  57
  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
  1,725
  1,704
  1,743
  1,788
  1,838
  1,894
  1,955
  2,022
  2,094
  2,171
  2,255
  2,344
  2,439
  2,540
  2,648
  2,762
  2,883
  3,011
  3,147
  3,290
  3,441
  3,601
  3,769
  3,946
  4,133
  4,330
  4,537
  4,755
  4,984
  5,226
  5,480
Adjusted assets (=assets-cash), $m
  1,668
  1,704
  1,743
  1,788
  1,838
  1,894
  1,955
  2,022
  2,094
  2,171
  2,255
  2,344
  2,439
  2,540
  2,648
  2,762
  2,883
  3,011
  3,147
  3,290
  3,441
  3,601
  3,769
  3,946
  4,133
  4,330
  4,537
  4,755
  4,984
  5,226
  5,480
Revenue / Adjusted assets
  0.176
  0.176
  0.176
  0.176
  0.176
  0.176
  0.176
  0.176
  0.176
  0.176
  0.176
  0.176
  0.176
  0.176
  0.176
  0.176
  0.176
  0.176
  0.176
  0.176
  0.176
  0.176
  0.176
  0.176
  0.176
  0.176
  0.176
  0.176
  0.176
  0.176
  0.176
Average production assets, $m
  1,534
  1,564
  1,600
  1,641
  1,687
  1,739
  1,795
  1,856
  1,922
  1,993
  2,070
  2,152
  2,239
  2,332
  2,431
  2,536
  2,647
  2,764
  2,889
  3,020
  3,159
  3,305
  3,460
  3,623
  3,794
  3,975
  4,165
  4,365
  4,576
  4,797
  5,030
Working capital, $m
  -34
  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
  40
Total debt, $m
  744
  703
  719
  738
  760
  784
  810
  838
  869
  902
  938
  976
  1,016
  1,060
  1,106
  1,154
  1,206
  1,261
  1,319
  1,380
  1,444
  1,512
  1,584
  1,660
  1,740
  1,824
  1,912
  2,005
  2,103
  2,206
  2,315
Total liabilities, $m
  768
  728
  744
  763
  785
  809
  835
  863
  894
  927
  963
  1,001
  1,041
  1,085
  1,131
  1,179
  1,231
  1,286
  1,344
  1,405
  1,469
  1,537
  1,609
  1,685
  1,765
  1,849
  1,937
  2,030
  2,128
  2,231
  2,340
Total equity, $m
  956
  976
  999
  1,024
  1,053
  1,085
  1,120
  1,158
  1,200
  1,244
  1,292
  1,343
  1,397
  1,456
  1,517
  1,583
  1,652
  1,725
  1,803
  1,885
  1,972
  2,063
  2,159
  2,261
  2,368
  2,481
  2,600
  2,725
  2,856
  2,994
  3,140
Total liabilities and equity, $m
  1,724
  1,704
  1,743
  1,787
  1,838
  1,894
  1,955
  2,021
  2,094
  2,171
  2,255
  2,344
  2,438
  2,541
  2,648
  2,762
  2,883
  3,011
  3,147
  3,290
  3,441
  3,600
  3,768
  3,946
  4,133
  4,330
  4,537
  4,755
  4,984
  5,225
  5,480
Debt-to-equity ratio
  0.778
  0.720
  0.720
  0.720
  0.720
  0.720
  0.720
  0.720
  0.720
  0.730
  0.730
  0.730
  0.730
  0.730
  0.730
  0.730
  0.730
  0.730
  0.730
  0.730
  0.730
  0.730
  0.730
  0.730
  0.730
  0.740
  0.740
  0.740
  0.740
  0.740
  0.740
Adjusted equity ratio
  0.539
  0.573
  0.573
  0.573
  0.573
  0.573
  0.573
  0.573
  0.573
  0.573
  0.573
  0.573
  0.573
  0.573
  0.573
  0.573
  0.573
  0.573
  0.573
  0.573
  0.573
  0.573
  0.573
  0.573
  0.573
  0.573
  0.573
  0.573
  0.573
  0.573
  0.573

CASH FLOW

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Net income, $m
  45
  67
  69
  71
  73
  75
  77
  80
  83
  86
  89
  93
  97
  101
  105
  109
  114
  119
  124
  130
  136
  142
  149
  156
  163
  171
  179
  188
  197
  206
  216
Depreciation, amort., depletion, $m
  62
  63
  65
  66
  68
  70
  73
  75
  78
  81
  84
  87
  91
  94
  98
  103
  107
  112
  117
  122
  128
  134
  140
  147
  154
  161
  169
  177
  185
  194
  204
Funds from operations, $m
  72
  131
  134
  137
  141
  145
  150
  155
  161
  167
  173
  180
  187
  195
  203
  212
  221
  231
  241
  252
  264
  276
  289
  303
  317
  332
  348
  365
  382
  401
  420
Change in working capital, $m
  -15
  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
  87
  130
  133
  137
  141
  145
  150
  155
  160
  166
  172
  179
  186
  194
  202
  211
  220
  230
  240
  251
  263
  275
  288
  301
  316
  331
  346
  363
  380
  399
  418
Maintenance CAPEX, $m
  0
  -62
  -63
  -65
  -66
  -68
  -70
  -73
  -75
  -78
  -81
  -84
  -87
  -91
  -94
  -98
  -103
  -107
  -112
  -117
  -122
  -128
  -134
  -140
  -147
  -154
  -161
  -169
  -177
  -185
  -194
New CAPEX, $m
  -241
  -31
  -36
  -41
  -46
  -51
  -56
  -61
  -66
  -71
  -76
  -82
  -87
  -93
  -99
  -105
  -111
  -118
  -124
  -131
  -139
  -146
  -154
  -163
  -171
  -181
  -190
  -200
  -211
  -222
  -233
Cash from investing activities, $m
  -238
  -93
  -99
  -106
  -112
  -119
  -126
  -134
  -141
  -149
  -157
  -166
  -174
  -184
  -193
  -203
  -214
  -225
  -236
  -248
  -261
  -274
  -288
  -303
  -318
  -335
  -351
  -369
  -388
  -407
  -427
Free cash flow, $m
  -151
  38
  34
  31
  28
  25
  23
  21
  19
  17
  15
  14
  12
  11
  9
  8
  7
  5
  4
  3
  2
  1
  0
  -1
  -3
  -4
  -5
  -6
  -7
  -8
  -9
Issuance/(repayment) of debt, $m
  124
  16
  17
  19
  21
  24
  26
  28
  31
  33
  36
  38
  41
  43
  46
  49
  52
  55
  58
  61
  65
  68
  72
  76
  80
  84
  88
  93
  98
  103
  108
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  
  121
  16
  17
  19
  21
  24
  26
  28
  31
  33
  36
  38
  41
  43
  46
  49
  52
  55
  58
  61
  65
  68
  72
  76
  80
  84
  88
  93
  98
  103
  108
Total cash flow (excl. dividends), $m
  -31
  53
  51
  50
  49
  49
  49
  49
  50
  50
  51
  52
  53
  54
  55
  57
  58
  60
  62
  64
  66
  69
  71
  74
  77
  80
  84
  87
  91
  95
  99
Retained Cash Flow (-), $m
  -46
  -20
  -22
  -26
  -29
  -32
  -35
  -38
  -41
  -44
  -48
  -51
  -55
  -58
  -62
  -65
  -69
  -73
  -78
  -82
  -87
  -91
  -96
  -102
  -107
  -113
  -119
  -125
  -131
  -138
  -145
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
 
  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
 
  33
  28
  24
  21
  17
  14
  11
  8
  6
  3
  1
  -2
  -4
  -7
  -9
  -11
  -13
  -16
  -18
  -20
  -23
  -25
  -27
  -30
  -32
  -35
  -38
  -40
  -43
  -46
Discount rate, %
 
  7.60
  7.98
  8.38
  8.80
  9.24
  9.70
  10.18
  10.69
  11.23
  11.79
  12.38
  13.00
  13.65
  14.33
  15.05
  15.80
  16.59
  17.42
  18.29
  19.20
  20.17
  21.17
  22.23
  23.34
  24.51
  25.74
  27.02
  28.37
  29.79
  31.28
PV of cash for distribution, $m
 
  30
  24
  19
  15
  11
  8
  6
  4
  2
  1
  0
  0
  -1
  -1
  -1
  -1
  -1
  -1
  -1
  -1
  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
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0

Navigator Holdings Ltd. owns and operates a fleet of liquefied gas carriers worldwide. It provides international and regional seaborne transportation services of liquefied petroleum gas, petrochemical gases, and ammonia for energy companies, industrial users, and commodity traders. As of November 11, 2015, the company owned and operated a fleet of 38 semi or fully-refrigerated liquefied gas carriers, including 9 new buildings. Navigator Holdings Ltd. was founded in 1997 and is based in London, United Kingdom.

FINANCIAL RATIOS  of  Navigator Holdings (NVGS)

Valuation Ratios
P/E Ratio 12.3
Price to Sales 1.9
Price to Book 0.6
Price to Tangible Book
Price to Cash Flow 6.4
Price to Free Cash Flow -3.6
Growth Rates
Sales Growth Rate -6.7%
Sales - 3 Yr. Growth Rate %
EPS Growth Rate %
EPS - 3 Yr. Growth Rate %
Capital Spending Gr. Rate 0.4%
Cap. Spend. - 3 Yr. Gr. Rate -12.4%
Financial Strength
Quick Ratio 1
Current Ratio 0
LT Debt to Equity 67.1%
Total Debt to Equity 77.8%
Interest Coverage 3
Management Effectiveness
Return On Assets 4.5%
Ret/ On Assets - 3 Yr. Avg. 7.1%
Return On Total Capital 2.8%
Ret/ On T. Cap. - 3 Yr. Avg. 5.4%
Return On Equity 4.8%
Return On Equity - 3 Yr. Avg. 9.3%
Asset Turnover 0.2
Profitability Ratios
Gross Margin 52.7%
Gross Margin - 3 Yr. Avg. 57.3%
EBITDA Margin 46.9%
EBITDA Margin - 3 Yr. Avg. 51.8%
Operating Margin 26.5%
Oper. Margin - 3 Yr. Avg. 35.2%
Pre-Tax Margin 15.6%
Pre-Tax Margin - 3 Yr. Avg. 25.4%
Net Profit Margin 15.3%
Net Profit Margin - 3 Yr. Avg. 25.1%
Effective Tax Rate 2.2%
Eff/ Tax Rate - 3 Yr. Avg. 1.4%
Payout Ratio 0%

NVGS stock valuation input parameters

Revenue. Company's revenue (or sales) is always the starting point of any cash flow forecast. In the NVGS stock intrinsic value calculation we used $294 million for the last fiscal year's total revenue generated by Navigator Holdings. The default revenue input number comes from 2016 income statement of Navigator 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 NVGS 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 7.6%, whose default value for NVGS is calculated based on our internal credit rating of Navigator 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 Navigator 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 NVGS stock the variable cost ratio is equal to 59.2%.

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 NVGS 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 4.4% for Navigator Holdings.

Corporate tax rate of 27% is the nominal tax rate for Navigator 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 NVGS 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 NVGS are equal to 521.6%.

Life of production assets of 24.7 years is the average useful life of capital assets used in Navigator 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 NVGS is equal to 4.1%. 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 - $956 million for Navigator 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 53.925 million for Navigator 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 Navigator Holdings at the current share price and the inputted number of shares is $0.5 billion.

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COMPANY NEWS

▶ Navigator Holdings misses 2Q profit forecasts   [12:00AM  Associated Press]
▶ Navigator Holdings beats 1Q profit forecasts   [May-08-17 04:37PM  Associated Press]
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▶ US Commerce Secretary Wilbur Ross Explains Trade Plans   [Mar-31-17 01:42PM  GuruFocus.com]
▶ Navigator Holdings beats Street 4Q forecasts   [Mar-01-17 07:01PM  Associated Press]
▶ Wilbur Rosss Latest Portfolio Picks   [Jan-19-17 08:09AM  at Investopedia]
▶ How Navigator Holdings Ltd (NVGS) Stacks Up Against Its Peers   [Dec-13-16 01:47AM  at Insider Monkey]
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▶ 2 Staggering Biotechs Join Wednesdays 52-Week Low Club   [Jul-20-16 04:04PM  at 24/7 Wall St.]
▶ Shares of Navigator Holdings Takes a Nose Dive In June   [Jul-01-16 12:37PM  at Motley Fool]
▶ Billionaire Wilbur Ross Top Stock Picks and Notable Moves   [May-24-16 08:38AM  at Insider Monkey]
Stock chart of NVGS Financial statements of NVGS
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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