Intrinsic value of Saia - SAIA

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$47.30

  Intrinsic Value

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  Rating & Target

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  Value-price divergence*

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Previous close

$47.30

 
Intrinsic value

$21.35

 
Up/down potential

-55%

 
Rating

str. sell

 
Value-price divergence* premium content

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

We calculate the intrinsic value of SAIA 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 1.2

 

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, %
  -0.25
  4.20
  4.28
  4.35
  4.42
  4.48
  4.53
  4.57
  4.62
  4.66
  4.69
  4.72
  4.75
  4.77
  4.80
  4.82
  4.84
  4.85
  4.87
  4.88
  4.89
  4.90
  4.91
  4.92
  4.93
  4.94
  4.94
  4.95
  4.95
  4.96
  4.96
Revenue, $m
  1,218
  1,269
  1,323
  1,381
  1,442
  1,507
  1,575
  1,647
  1,723
  1,803
  1,888
  1,977
  2,071
  2,170
  2,274
  2,383
  2,498
  2,620
  2,747
  2,881
  3,022
  3,170
  3,326
  3,490
  3,662
  3,842
  4,032
  4,232
  4,441
  4,662
  4,893
Variable operating expenses, $m
 
  1,175
  1,225
  1,279
  1,335
  1,395
  1,458
  1,525
  1,595
  1,669
  1,747
  1,829
  1,915
  2,007
  2,103
  2,204
  2,311
  2,423
  2,541
  2,665
  2,795
  2,932
  3,077
  3,228
  3,387
  3,554
  3,730
  3,914
  4,108
  4,312
  4,526
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
  1,139
  1,175
  1,225
  1,279
  1,335
  1,395
  1,458
  1,525
  1,595
  1,669
  1,747
  1,829
  1,915
  2,007
  2,103
  2,204
  2,311
  2,423
  2,541
  2,665
  2,795
  2,932
  3,077
  3,228
  3,387
  3,554
  3,730
  3,914
  4,108
  4,312
  4,526
Operating income, $m
  79
  94
  98
  102
  107
  112
  117
  122
  128
  134
  140
  148
  155
  163
  170
  179
  187
  196
  206
  216
  227
  238
  249
  262
  275
  288
  302
  317
  333
  350
  367
EBITDA, $m
  155
  172
  180
  188
  196
  205
  214
  224
  234
  245
  256
  269
  281
  295
  309
  324
  339
  356
  373
  391
  411
  431
  452
  474
  498
  522
  548
  575
  603
  633
  665
Interest expense (income), $m
  2
  3
  3
  3
  4
  5
  5
  6
  6
  7
  8
  9
  9
  10
  11
  12
  13
  14
  15
  16
  18
  19
  20
  22
  23
  25
  26
  28
  30
  32
  34
Earnings before tax, $m
  75
  91
  95
  99
  103
  107
  112
  117
  122
  127
  133
  140
  146
  152
  159
  167
  174
  182
  191
  200
  209
  219
  229
  240
  251
  263
  276
  289
  303
  318
  333
Tax expense, $m
  27
  25
  26
  27
  28
  29
  30
  31
  33
  34
  36
  38
  39
  41
  43
  45
  47
  49
  52
  54
  56
  59
  62
  65
  68
  71
  75
  78
  82
  86
  90
Net income, $m
  48
  67
  69
  72
  75
  78
  82
  85
  89
  93
  97
  102
  106
  111
  116
  122
  127
  133
  139
  146
  153
  160
  167
  175
  184
  192
  202
  211
  221
  232
  243

BALANCE SHEET

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Cash and short-term investments, $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
Total assets, $m
  800
  832
  867
  905
  945
  987
  1,032
  1,079
  1,129
  1,182
  1,237
  1,295
  1,357
  1,422
  1,490
  1,562
  1,637
  1,717
  1,800
  1,888
  1,980
  2,077
  2,180
  2,287
  2,399
  2,518
  2,642
  2,773
  2,911
  3,055
  3,206
Adjusted assets (=assets-cash), $m
  798
  832
  867
  905
  945
  987
  1,032
  1,079
  1,129
  1,182
  1,237
  1,295
  1,357
  1,422
  1,490
  1,562
  1,637
  1,717
  1,800
  1,888
  1,980
  2,077
  2,180
  2,287
  2,399
  2,518
  2,642
  2,773
  2,911
  3,055
  3,206
Revenue / Adjusted assets
  1.526
  1.525
  1.526
  1.526
  1.526
  1.527
  1.526
  1.526
  1.526
  1.525
  1.526
  1.527
  1.526
  1.526
  1.526
  1.526
  1.526
  1.526
  1.526
  1.526
  1.526
  1.526
  1.526
  1.526
  1.526
  1.526
  1.526
  1.526
  1.526
  1.526
  1.526
Average production assets, $m
  586
  610
  637
  664
  694
  725
  757
  792
  829
  867
  908
  951
  996
  1,044
  1,094
  1,146
  1,202
  1,260
  1,321
  1,386
  1,454
  1,525
  1,600
  1,679
  1,761
  1,848
  1,940
  2,036
  2,136
  2,242
  2,354
Working capital, $m
  21
  38
  40
  41
  43
  45
  47
  49
  52
  54
  57
  59
  62
  65
  68
  71
  75
  79
  82
  86
  91
  95
  100
  105
  110
  115
  121
  127
  133
  140
  147
Total debt, $m
  74
  86
  100
  114
  130
  147
  165
  183
  203
  224
  246
  269
  293
  319
  346
  374
  404
  435
  468
  503
  539
  578
  618
  660
  705
  752
  801
  852
  907
  964
  1,024
Total liabilities, $m
  317
  329
  343
  357
  373
  390
  408
  426
  446
  467
  489
  512
  536
  562
  589
  617
  647
  678
  711
  746
  782
  821
  861
  903
  948
  995
  1,044
  1,095
  1,150
  1,207
  1,267
Total equity, $m
  483
  503
  525
  548
  572
  597
  624
  653
  683
  715
  748
  784
  821
  860
  901
  945
  991
  1,039
  1,089
  1,142
  1,198
  1,257
  1,319
  1,384
  1,452
  1,523
  1,599
  1,678
  1,761
  1,848
  1,940
Total liabilities and equity, $m
  800
  832
  868
  905
  945
  987
  1,032
  1,079
  1,129
  1,182
  1,237
  1,296
  1,357
  1,422
  1,490
  1,562
  1,638
  1,717
  1,800
  1,888
  1,980
  2,078
  2,180
  2,287
  2,400
  2,518
  2,643
  2,773
  2,911
  3,055
  3,207
Debt-to-equity ratio
  0.153
  0.170
  0.190
  0.210
  0.230
  0.250
  0.260
  0.280
  0.300
  0.310
  0.330
  0.340
  0.360
  0.370
  0.380
  0.400
  0.410
  0.420
  0.430
  0.440
  0.450
  0.460
  0.470
  0.480
  0.490
  0.490
  0.500
  0.510
  0.510
  0.520
  0.530
Adjusted equity ratio
  0.603
  0.605
  0.605
  0.605
  0.605
  0.605
  0.605
  0.605
  0.605
  0.605
  0.605
  0.605
  0.605
  0.605
  0.605
  0.605
  0.605
  0.605
  0.605
  0.605
  0.605
  0.605
  0.605
  0.605
  0.605
  0.605
  0.605
  0.605
  0.605
  0.605
  0.605

CASH FLOW

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Net income, $m
  48
  67
  69
  72
  75
  78
  82
  85
  89
  93
  97
  102
  106
  111
  116
  122
  127
  133
  139
  146
  153
  160
  167
  175
  184
  192
  202
  211
  221
  232
  243
Depreciation, amort., depletion, $m
  76
  78
  82
  85
  89
  93
  97
  101
  106
  111
  116
  120
  126
  132
  138
  145
  152
  159
  167
  175
  184
  193
  203
  212
  223
  234
  246
  258
  270
  284
  298
Funds from operations, $m
  148
  145
  151
  157
  164
  171
  179
  187
  195
  204
  213
  222
  233
  243
  255
  267
  279
  293
  307
  321
  337
  353
  370
  388
  407
  426
  447
  469
  492
  516
  541
Change in working capital, $m
  2
  2
  2
  2
  2
  2
  2
  2
  2
  2
  3
  3
  3
  3
  3
  3
  3
  4
  4
  4
  4
  4
  5
  5
  5
  5
  6
  6
  6
  7
  7
Cash from operations, $m
  146
  175
  150
  156
  162
  169
  177
  184
  193
  201
  210
  220
  230
  240
  252
  263
  276
  289
  303
  317
  332
  348
  365
  383
  401
  421
  441
  463
  485
  509
  534
Maintenance CAPEX, $m
  0
  -74
  -77
  -81
  -84
  -88
  -92
  -96
  -100
  -105
  -110
  -115
  -120
  -126
  -132
  -138
  -145
  -152
  -159
  -167
  -175
  -184
  -193
  -203
  -212
  -223
  -234
  -246
  -258
  -270
  -284
New CAPEX, $m
  -119
  -24
  -26
  -28
  -29
  -31
  -33
  -35
  -37
  -39
  -41
  -43
  -45
  -48
  -50
  -53
  -55
  -58
  -61
  -64
  -68
  -71
  -75
  -79
  -83
  -87
  -91
  -96
  -101
  -106
  -111
Cash from investing activities, $m
  -118
  -98
  -103
  -109
  -113
  -119
  -125
  -131
  -137
  -144
  -151
  -158
  -165
  -174
  -182
  -191
  -200
  -210
  -220
  -231
  -243
  -255
  -268
  -282
  -295
  -310
  -325
  -342
  -359
  -376
  -395
Free cash flow, $m
  28
  76
  46
  47
  49
  50
  52
  54
  56
  58
  60
  62
  64
  67
  69
  72
  75
  79
  82
  85
  89
  93
  97
  102
  106
  111
  116
  121
  127
  133
  139
Issuance/(repayment) of debt, $m
  -30
  14
  14
  15
  16
  17
  18
  19
  20
  21
  22
  23
  24
  26
  27
  28
  30
  31
  33
  35
  36
  38
  40
  42
  45
  47
  49
  52
  54
  57
  60
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
  0
  0
  0
  0
  0
  0
  0
Cash from financing (excl. dividends), $m  
  -27
  14
  14
  15
  16
  17
  18
  19
  20
  21
  22
  23
  24
  26
  27
  28
  30
  31
  33
  35
  36
  38
  40
  42
  45
  47
  49
  52
  54
  57
  60
Total cash flow (excl. dividends), $m
  1
  90
  60
  62
  65
  67
  70
  72
  75
  78
  82
  85
  89
  92
  96
  101
  105
  110
  115
  120
  126
  131
  138
  144
  151
  158
  165
  173
  181
  190
  199
Retained Cash Flow (-), $m
  -55
  -20
  -22
  -23
  -24
  -26
  -27
  -29
  -30
  -32
  -34
  -35
  -37
  -39
  -41
  -43
  -46
  -48
  -51
  -53
  -56
  -59
  -62
  -65
  -68
  -72
  -75
  -79
  -83
  -87
  -92
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
 
  69
  39
  40
  40
  42
  43
  44
  45
  47
  48
  50
  51
  53
  55
  57
  59
  62
  64
  67
  70
  73
  76
  79
  82
  86
  90
  94
  98
  103
  107
Discount rate, %
 
  4.30
  4.52
  4.74
  4.98
  5.23
  5.49
  5.76
  6.05
  6.35
  6.67
  7.00
  7.35
  7.72
  8.11
  8.51
  8.94
  9.39
  9.86
  10.35
  10.87
  11.41
  11.98
  12.58
  13.21
  13.87
  14.56
  15.29
  16.05
  16.86
  17.70
PV of cash for distribution, $m
 
  67
  35
  34
  33
  32
  31
  30
  28
  27
  25
  24
  22
  20
  19
  17
  15
  13
  12
  10
  9
  8
  6
  5
  4
  3
  3
  2
  2
  1
  1
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

Saia, Inc., through its subsidiaries, operates as a transportation company in the United States. It provides regional and interregional less-than-truckload, truckload, guaranteed, expedited, and logistics services. The company offers solutions for shipments between 100 and 10,000 pounds. As of December 31, 2015, it had a network of 49 owned service facilities and 95 leased service facilities; and approximately 3,932 tractors and 12,371 trailers. The company as formerly known as SCS Transportation, Inc. Saia, Inc. was founded in 2000 and is headquartered in Johns Creek, Georgia.

FINANCIAL RATIOS  of  Saia (SAIA)

Valuation Ratios
P/E Ratio 25
Price to Sales 1
Price to Book 2.5
Price to Tangible Book
Price to Cash Flow 8.2
Price to Free Cash Flow 44.4
Growth Rates
Sales Growth Rate -0.2%
Sales - 3 Yr. Growth Rate %
EPS Growth Rate %
EPS - 3 Yr. Growth Rate %
Capital Spending Gr. Rate 36.8%
Cap. Spend. - 3 Yr. Gr. Rate -1.1%
Financial Strength
Quick Ratio 0
Current Ratio 0
LT Debt to Equity 11.8%
Total Debt to Equity 15.3%
Interest Coverage 39
Management Effectiveness
Return On Assets 6.4%
Ret/ On Assets - 3 Yr. Avg. 7.7%
Return On Total Capital 9.1%
Ret/ On T. Cap. - 3 Yr. Avg. 11.1%
Return On Equity 10.5%
Return On Equity - 3 Yr. Avg. 13.3%
Asset Turnover 1.6
Profitability Ratios
Gross Margin 81.1%
Gross Margin - 3 Yr. Avg. 78.4%
EBITDA Margin 12.6%
EBITDA Margin - 3 Yr. Avg. 12.2%
Operating Margin 6.5%
Oper. Margin - 3 Yr. Avg. 6.8%
Pre-Tax Margin 6.2%
Pre-Tax Margin - 3 Yr. Avg. 6.5%
Net Profit Margin 3.9%
Net Profit Margin - 3 Yr. Avg. 4.2%
Effective Tax Rate 36%
Eff/ Tax Rate - 3 Yr. Avg. 35.9%
Payout Ratio 0%

SAIA stock valuation input parameters

Revenue. Company's revenue (or sales) is always the starting point of any cash flow forecast. In the SAIA stock intrinsic value calculation we used $1218 million for the last fiscal year's total revenue generated by Saia. The default revenue input number comes from 2016 income statement of Saia. 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 SAIA stock valuation model: a) initial revenue growth rate of 4.2% 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 4.3%, whose default value for SAIA is calculated based on our internal credit rating of Saia, 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 Saia.
    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 SAIA stock the variable cost ratio is equal to 92.6%.

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 SAIA 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 3.5% for Saia.

Corporate tax rate of 27% is the nominal tax rate for Saia. 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 SAIA 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 SAIA are equal to 48.1%.

Life of production assets of 7.9 years is the average useful life of capital assets used in Saia 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 SAIA is equal to 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 - $483 million for Saia - 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 25.282 million for Saia 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 Saia at the current share price and the inputted number of shares is $1.2 billion.


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COMPANY NEWS

▶ Saia LTL Freight to Open Four Terminals in May 2017   [Mar-20-17 11:32AM  Marketwired]
▶ Saia misses 4Q profit forecasts   [07:48AM  Associated Press]
▶ Saia LTL Freight Driver Named to America's Road Team   [Jan-12-17 05:40PM  Marketwired]
▶ Is Alamo Group, Inc. (ALG) A Good Stock To Buy?   [Dec-12-16 02:09AM  at Insider Monkey]
▶ Saia LTL Freight Receives Two First Place Safety Awards   [Nov-23-16 02:13PM  Marketwired]
▶ Saia LTL Freight to Expand into Northeastern US   [Oct-26-16 04:53PM  Marketwired]
▶ Five Trucking Stocks Hedge Funds Are Betting On   [Dec-22  02:07PM  at Insider Monkey]
▶ Smart Money is Pouring into Saia Inc (SAIA)   [Dec-02  03:24PM  at Insider Monkey]
▶ Constant Contact Inc (CTCT): Hedge Funds Are Snapping Up   [Nov-29  05:04PM  at Insider Monkey]
▶ Driver Costs Hit Trucking Company Bottom Lines   [Oct-28  03:43PM  at The Wall Street Journal]
Stock chart of SAIA Financial statements of SAIA
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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