Intrinsic value of Rand Logistics - RLOG

Previous Close

$0.35

  Intrinsic Value

$0.12

stock screener

  Rating & Target

str. sell

-66%

Previous close

$0.35

 
Intrinsic value

$0.12

 
Up/down potential

-66%

 
Rating

str. sell

We calculate the intrinsic value of RLOG 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 2017), $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 0.0

 

FINANCIAL STATEMENTS FORECAST and PRESENT VALUE CALCULATION

Fiscal year
2017(a)
   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
   2047

INCOME STATEMENT

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Revenue growth rate, %
  -22.30
  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
  115
  117
  120
  123
  127
  130
  135
  139
  144
  149
  155
  161
  168
  175
  182
  190
  198
  207
  217
  226
  237
  248
  259
  272
  285
  298
  312
  327
  343
  360
  377
Variable operating expenses, $m
 
  86
  88
  90
  92
  95
  98
  101
  105
  109
  113
  116
  121
  126
  131
  137
  143
  150
  156
  163
  171
  179
  187
  196
  205
  215
  225
  236
  248
  259
  272
Fixed operating expenses, $m
 
  34
  35
  36
  36
  37
  38
  39
  40
  41
  42
  43
  44
  45
  47
  48
  49
  50
  51
  53
  54
  55
  57
  58
  60
  61
  63
  64
  66
  68
  69
Total operating expenses, $m
  116
  120
  123
  126
  128
  132
  136
  140
  145
  150
  155
  159
  165
  171
  178
  185
  192
  200
  207
  216
  225
  234
  244
  254
  265
  276
  288
  300
  314
  327
  341
Operating income, $m
  0
  -2
  -2
  -2
  -2
  -2
  -2
  -1
  -1
  -1
  0
  2
  2
  3
  4
  5
  6
  8
  9
  10
  12
  14
  15
  17
  20
  22
  24
  27
  30
  33
  36
EBITDA, $m
  30
  28
  29
  30
  30
  32
  33
  34
  36
  38
  40
  42
  44
  47
  50
  53
  56
  59
  63
  67
  71
  76
  80
  85
  91
  96
  102
  109
  115
  123
  130
Interest expense (income), $m
  13
  13
  13
  14
  14
  15
  15
  16
  16
  17
  18
  18
  19
  20
  21
  22
  23
  24
  25
  26
  28
  29
  30
  32
  33
  35
  37
  39
  41
  43
  45
Earnings before tax, $m
  -20
  -16
  -16
  -16
  -16
  -17
  -17
  -17
  -17
  -17
  -17
  -17
  -17
  -17
  -17
  -17
  -16
  -16
  -16
  -16
  -16
  -15
  -15
  -14
  -14
  -13
  -13
  -12
  -11
  -10
  -9
Tax expense, $m
  -2
  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
  -18
  -16
  -16
  -16
  -16
  -17
  -17
  -17
  -17
  -17
  -17
  -17
  -17
  -17
  -17
  -17
  -16
  -16
  -16
  -16
  -16
  -15
  -15
  -14
  -14
  -13
  -13
  -12
  -11
  -10
  -9

BALANCE SHEET

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Cash and short-term investments, $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
Total assets, $m
  249
  254
  260
  266
  274
  282
  291
  301
  312
  324
  336
  349
  363
  379
  395
  412
  430
  449
  469
  490
  513
  537
  562
  588
  616
  645
  676
  709
  743
  779
  817
Adjusted assets (=assets-cash), $m
  249
  254
  260
  266
  274
  282
  291
  301
  312
  324
  336
  349
  363
  379
  395
  412
  430
  449
  469
  490
  513
  537
  562
  588
  616
  645
  676
  709
  743
  779
  817
Revenue / Adjusted assets
  0.462
  0.461
  0.462
  0.462
  0.464
  0.461
  0.464
  0.462
  0.462
  0.460
  0.461
  0.461
  0.463
  0.462
  0.461
  0.461
  0.460
  0.461
  0.463
  0.461
  0.462
  0.462
  0.461
  0.463
  0.463
  0.462
  0.462
  0.461
  0.462
  0.462
  0.461
Average production assets, $m
  227
  232
  237
  243
  250
  257
  266
  275
  285
  295
  306
  319
  331
  345
  360
  375
  392
  409
  428
  447
  468
  489
  512
  536
  562
  588
  617
  646
  677
  710
  745
Working capital, $m
  -214
  -14
  -15
  -15
  -15
  -16
  -16
  -17
  -18
  -18
  -19
  -20
  -20
  -21
  -22
  -23
  -24
  -25
  -26
  -28
  -29
  -30
  -32
  -33
  -35
  -36
  -38
  -40
  -42
  -44
  -46
Total debt, $m
  200
  199
  204
  210
  217
  224
  232
  241
  251
  261
  272
  284
  297
  311
  325
  340
  357
  374
  392
  411
  431
  453
  475
  499
  524
  551
  578
  608
  638
  671
  705
Total liabilities, $m
  229
  229
  234
  240
  247
  254
  262
  271
  281
  291
  302
  314
  327
  341
  355
  370
  387
  404
  422
  441
  461
  483
  505
  529
  554
  581
  608
  638
  668
  701
  735
Total equity, $m
  19
  25
  26
  27
  27
  28
  29
  30
  31
  32
  34
  35
  36
  38
  39
  41
  43
  45
  47
  49
  51
  54
  56
  59
  62
  65
  68
  71
  74
  78
  82
Total liabilities and equity, $m
  248
  254
  260
  267
  274
  282
  291
  301
  312
  323
  336
  349
  363
  379
  394
  411
  430
  449
  469
  490
  512
  537
  561
  588
  616
  646
  676
  709
  742
  779
  817
Debt-to-equity ratio
  10.526
  7.820
  7.840
  7.870
  7.900
  7.940
  7.970
  8.000
  8.040
  8.070
  8.110
  8.140
  8.170
  8.210
  8.240
  8.270
  8.300
  8.330
  8.360
  8.390
  8.410
  8.440
  8.470
  8.490
  8.510
  8.540
  8.560
  8.580
  8.600
  8.610
  8.630
Adjusted equity ratio
  0.076
  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
  -18
  -16
  -16
  -16
  -16
  -17
  -17
  -17
  -17
  -17
  -17
  -17
  -17
  -17
  -17
  -17
  -16
  -16
  -16
  -16
  -16
  -15
  -15
  -14
  -14
  -13
  -13
  -12
  -11
  -10
  -9
Depreciation, amort., depletion, $m
  30
  30
  31
  32
  33
  34
  35
  36
  37
  38
  40
  40
  42
  44
  46
  48
  50
  52
  54
  57
  59
  62
  65
  68
  71
  74
  78
  82
  86
  90
  94
Funds from operations, $m
  -2
  15
  15
  16
  16
  17
  18
  19
  20
  21
  22
  24
  25
  27
  29
  31
  33
  35
  38
  41
  44
  47
  50
  54
  57
  61
  65
  70
  75
  80
  85
Change in working capital, $m
  -7
  0
  0
  0
  0
  0
  -1
  -1
  -1
  -1
  -1
  -1
  -1
  -1
  -1
  -1
  -1
  -1
  -1
  -1
  -1
  -1
  -1
  -1
  -2
  -2
  -2
  -2
  -2
  -2
  -2
Cash from operations, $m
  5
  15
  16
  16
  17
  18
  18
  19
  20
  22
  23
  24
  26
  28
  30
  32
  34
  37
  39
  42
  45
  48
  51
  55
  59
  63
  67
  72
  77
  82
  87
Maintenance CAPEX, $m
  0
  -29
  -29
  -30
  -31
  -32
  -33
  -34
  -35
  -36
  -37
  -39
  -40
  -42
  -44
  -46
  -48
  -50
  -52
  -54
  -57
  -59
  -62
  -65
  -68
  -71
  -74
  -78
  -82
  -86
  -90
New CAPEX, $m
  -13
  -5
  -5
  -6
  -7
  -8
  -8
  -9
  -10
  -11
  -11
  -12
  -13
  -14
  -15
  -16
  -16
  -17
  -18
  -19
  -21
  -22
  -23
  -24
  -25
  -27
  -28
  -30
  -31
  -33
  -35
Cash from investing activities, $m
  -13
  -34
  -34
  -36
  -38
  -40
  -41
  -43
  -45
  -47
  -48
  -51
  -53
  -56
  -59
  -62
  -64
  -67
  -70
  -73
  -78
  -81
  -85
  -89
  -93
  -98
  -102
  -108
  -113
  -119
  -125
Free cash flow, $m
  -8
  -18
  -19
  -20
  -21
  -22
  -23
  -23
  -24
  -25
  -26
  -26
  -27
  -28
  -29
  -29
  -30
  -30
  -31
  -32
  -32
  -33
  -33
  -34
  -34
  -35
  -35
  -36
  -36
  -37
  -37
Issuance/(repayment) of debt, $m
  11
  -1
  5
  6
  7
  7
  8
  9
  10
  10
  11
  12
  13
  14
  14
  15
  16
  17
  18
  19
  20
  21
  23
  24
  25
  26
  28
  29
  31
  32
  34
Issuance/(repurchase) of shares, $m
  0
  22
  16
  17
  17
  17
  18
  18
  18
  19
  19
  18
  18
  18
  18
  18
  18
  18
  18
  18
  18
  18
  17
  17
  17
  16
  16
  15
  14
  14
  13
Cash from financing (excl. dividends), $m  
  8
  21
  21
  23
  24
  24
  26
  27
  28
  29
  30
  30
  31
  32
  32
  33
  34
  35
  36
  37
  38
  39
  40
  41
  42
  42
  44
  44
  45
  46
  47
Total cash flow (excl. dividends), $m
  0
  2
  3
  3
  3
  3
  3
  4
  4
  4
  4
  3
  4
  4
  4
  4
  5
  5
  5
  6
  6
  6
  7
  7
  7
  8
  8
  8
  9
  9
  10
Retained Cash Flow (-), $m
  21
  -22
  -16
  -17
  -17
  -17
  -18
  -18
  -18
  -19
  -19
  -18
  -18
  -18
  -18
  -18
  -18
  -18
  -18
  -18
  -18
  -18
  -17
  -17
  -17
  -16
  -16
  -15
  -14
  -14
  -13
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
 
  -20
  -14
  -14
  -14
  -14
  -14
  -14
  -14
  -15
  -15
  -14
  -14
  -14
  -14
  -14
  -14
  -13
  -13
  -12
  -12
  -11
  -11
  -10
  -9
  -9
  -8
  -7
  -6
  -4
  -3
Discount rate, %
 
  14.00
  14.70
  15.44
  16.21
  17.02
  17.87
  18.76
  19.70
  20.68
  21.72
  22.80
  23.94
  25.14
  26.40
  27.72
  29.10
  30.56
  32.09
  33.69
  35.38
  37.15
  39.00
  40.95
  43.00
  45.15
  47.41
  49.78
  52.27
  54.88
  57.63
PV of cash for distribution, $m
 
  -17
  -10
  -9
  -8
  -6
  -5
  -4
  -3
  -3
  -2
  -2
  -1
  -1
  -1
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
Current shareholders' claim on cash, %
  100
  37.8
  19.8
  10.4
  5.4
  2.9
  1.5
  0.8
  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
  0.0

Rand Logistics, Inc. is a shipping company that, through its operating subsidiaries, is engaged in the operation of bulk carriers on the Great Lakes. The Company's shipping business is operated in Canada by Lower Lakes Towing Ltd. (Lower Lakes Towing) and in the United States by Lower Lakes Transportation Company (Lower Lakes Transportation). The Company transports construction aggregates, salt, grain, coal, iron ore, and other dry bulk commodities for customers in the construction, electric utility, food, and integrated steel industries. Lower Lakes' fleet consists of approximately six self-unloading bulk carriers and over four conventional bulk carriers in Canada and approximately six self-unloading bulk carriers in the United States, including over three articulated tug and barge units. Lower Lakes Towing owns approximately nine Canadian vessels and Lower Lakes Towing (17) Ltd. (Lower Lakes (17)) owns the tenth Canadian vessel.

FINANCIAL RATIOS  of  Rand Logistics (RLOG)

Valuation Ratios
P/E Ratio -0.4
Price to Sales 0.1
Price to Book 0.3
Price to Tangible Book
Price to Cash Flow 1.3
Price to Free Cash Flow -0.8
Growth Rates
Sales Growth Rate -22.3%
Sales - 3 Yr. Growth Rate %
EPS Growth Rate %
EPS - 3 Yr. Growth Rate %
Capital Spending Gr. Rate -71.1%
Cap. Spend. - 3 Yr. Gr. Rate -5.2%
Financial Strength
Quick Ratio 0
Current Ratio 0
LT Debt to Equity 0%
Total Debt to Equity 1052.6%
Interest Coverage -1
Management Effectiveness
Return On Assets -2.5%
Ret/ On Assets - 3 Yr. Avg. 0.3%
Return On Total Capital -8.1%
Ret/ On T. Cap. - 3 Yr. Avg. -4.6%
Return On Equity -61%
Return On Equity - 3 Yr. Avg. -29%
Asset Turnover 0.5
Profitability Ratios
Gross Margin 41.7%
Gross Margin - 3 Yr. Avg. 37.2%
EBITDA Margin 20%
EBITDA Margin - 3 Yr. Avg. 19.5%
Operating Margin -0.9%
Oper. Margin - 3 Yr. Avg. 2.6%
Pre-Tax Margin -17.4%
Pre-Tax Margin - 3 Yr. Avg. -8.7%
Net Profit Margin -15.7%
Net Profit Margin - 3 Yr. Avg. -8.1%
Effective Tax Rate 10%
Eff/ Tax Rate - 3 Yr. Avg. 3.3%
Payout Ratio 0%

RLOG stock valuation input parameters

Revenue. Company's revenue (or sales) is always the starting point of any cash flow forecast. In the RLOG stock intrinsic value calculation we used $115 million for the last fiscal year's total revenue generated by Rand Logistics. The default revenue input number comes from 2017 income statement of Rand Logistics. 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 RLOG 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 14%, whose default value for RLOG is calculated based on our internal credit rating of Rand Logistics, 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 Rand Logistics.
    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 RLOG stock the variable cost ratio is equal to 73%.

Fixed operating expenses is just that - expenses that are not dependant on the volume of production. They are set to $33 million in the base year in the intrinsic value calculation for RLOG 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 6.7% for Rand Logistics.

Corporate tax rate of 27% is the nominal tax rate for Rand Logistics. 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 RLOG 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 RLOG are equal to 197.4%.

Life of production assets of 7.9 years is the average useful life of capital assets used in Rand Logistics 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 RLOG is equal to -12.2%. 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 - $19 million for Rand Logistics - 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 18.642 million for Rand Logistics 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 Rand Logistics at the current share price and the inputted number of shares is $0.0 billion.

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COMPANY NEWS

▶ [$$] Companies to Watch - July 10, 2017   [Jul-10-17 05:03PM  The Wall Street Journal]
▶ How Rand Logistics, Inc. (RLOG) Stacks Up Against Its Peers   [Dec-17-16 04:02PM  Insider Monkey]
▶ Rand Logistics Reports Fiscal Year 2016 Financial Results   [Jun-15-16 04:53PM  GlobeNewswire]
▶ Rand Logistics Announces Plans for 2016 Sailing Season   [Apr-06-16 08:04AM  GlobeNewswire]
▶ Rand Logistics Announces New Corporate Headquarters   [Feb-05-16 04:42PM  GlobeNewswire]
▶ Rand Logistics, Inc. Partners With Georgian College   [Nov-13  04:05PM  GlobeNewswire]
Financial statements of RLOG
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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