Intrinsic value of Scorpio Bulkers - SALT

Previous Close

$7.25

  Intrinsic Value

$3.18

stock screener

  Rating & Target

str. sell

-56%

Previous close

$7.25

 
Intrinsic value

$3.18

 
Up/down potential

-56%

 
Rating

str. sell

We calculate the intrinsic value of SALT 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

Initial revenue growth rate, %
Terminal revenue growth rate, %
Revenue decline factor
Initial discount rate, %
Discount rate multiplier
Shares outstanding, mln

 

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, %
  23.81
  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
  78
  259
  400
  599
  869
  1,226
  1,685
  2,262
  2,971
  3,822
  4,828
  5,995
  7,330
  8,835
  10,512
  12,360
  14,378
  16,562
  18,909
  21,416
  24,078
  26,892
  29,855
  32,964
  36,219
  39,619
  43,165
  46,857
  50,698
  54,692
  58,844
Variable operating expenses, $m
 
  118
  183
  273
  396
  559
  769
  1,032
  1,355
  1,743
  2,202
  2,734
  3,342
  4,029
  4,793
  5,636
  6,556
  7,552
  8,623
  9,766
  10,979
  12,263
  13,614
  15,032
  16,516
  18,066
  19,683
  21,367
  23,118
  24,940
  26,833
Fixed operating expenses, $m
 
  149
  152
  156
  159
  163
  166
  170
  174
  178
  181
  185
  190
  194
  198
  202
  207
  211
  216
  221
  226
  231
  236
  241
  246
  252
  257
  263
  269
  274
  280
Total operating expenses, $m
  179
  267
  335
  429
  555
  722
  935
  1,202
  1,529
  1,921
  2,383
  2,919
  3,532
  4,223
  4,991
  5,838
  6,763
  7,763
  8,839
  9,987
  11,205
  12,494
  13,850
  15,273
  16,762
  18,318
  19,940
  21,630
  23,387
  25,214
  27,113
Operating income, $m
  -101
  -8
  65
  170
  313
  504
  751
  1,061
  1,442
  1,902
  2,445
  3,076
  3,798
  4,613
  5,521
  6,522
  7,615
  8,798
  10,071
  11,429
  12,873
  14,398
  16,005
  17,692
  19,457
  21,301
  23,225
  25,227
  27,311
  29,478
  31,731
EBITDA, $m
  -64
  228
  430
  716
  1,105
  1,621
  2,286
  3,122
  4,149
  5,384
  6,844
  8,538
  10,476
  12,662
  15,098
  17,783
  20,714
  23,888
  27,299
  30,941
  34,810
  38,899
  43,206
  47,726
  52,457
  57,399
  62,552
  67,919
  73,503
  79,309
  85,343
Interest expense (income), $m
  23
  38
  61
  95
  142
  207
  292
  402
  540
  709
  913
  1,153
  1,432
  1,751
  2,110
  2,511
  2,952
  3,434
  3,956
  4,517
  5,116
  5,752
  6,424
  7,132
  7,875
  8,653
  9,465
  10,312
  11,194
  12,112
  13,066
Earnings before tax, $m
  -125
  -46
  4
  75
  171
  297
  458
  659
  902
  1,193
  1,532
  1,923
  2,366
  2,862
  3,410
  4,011
  4,662
  5,364
  6,114
  6,912
  7,757
  8,647
  9,581
  10,560
  11,582
  12,649
  13,760
  14,916
  16,117
  17,367
  18,665
Tax expense, $m
  0
  0
  1
  20
  46
  80
  124
  178
  244
  322
  414
  519
  639
  773
  921
  1,083
  1,259
  1,448
  1,651
  1,866
  2,094
  2,335
  2,587
  2,851
  3,127
  3,415
  3,715
  4,027
  4,352
  4,689
  5,039
Net income, $m
  -125
  -46
  3
  55
  125
  217
  334
  481
  659
  871
  1,119
  1,404
  1,727
  2,089
  2,490
  2,928
  3,404
  3,916
  4,464
  5,046
  5,662
  6,312
  6,994
  7,709
  8,455
  9,234
  10,045
  10,888
  11,766
  12,678
  13,625

BALANCE SHEET

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Cash and short-term investments, $m
  102
  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
  1,547
  2,618
  4,045
  6,049
  8,777
  12,384
  17,025
  22,852
  30,006
  38,611
  48,769
  60,560
  74,040
  89,243
  106,181
  124,850
  145,231
  167,294
  191,004
  216,322
  243,210
  271,633
  301,562
  332,973
  365,853
  400,196
  436,007
  473,301
  512,104
  552,449
  594,383
Adjusted assets (=assets-cash), $m
  1,445
  2,618
  4,045
  6,049
  8,777
  12,384
  17,025
  22,852
  30,006
  38,611
  48,769
  60,560
  74,040
  89,243
  106,181
  124,850
  145,231
  167,294
  191,004
  216,322
  243,210
  271,633
  301,562
  332,973
  365,853
  400,196
  436,007
  473,301
  512,104
  552,449
  594,383
Revenue / Adjusted assets
  0.054
  0.099
  0.099
  0.099
  0.099
  0.099
  0.099
  0.099
  0.099
  0.099
  0.099
  0.099
  0.099
  0.099
  0.099
  0.099
  0.099
  0.099
  0.099
  0.099
  0.099
  0.099
  0.099
  0.099
  0.099
  0.099
  0.099
  0.099
  0.099
  0.099
  0.099
Average production assets, $m
  0
  2,362
  3,649
  5,457
  7,917
  11,170
  15,356
  20,612
  27,065
  34,827
  43,989
  54,624
  66,783
  80,496
  95,774
  112,614
  130,997
  150,897
  172,283
  195,120
  219,372
  245,010
  272,005
  300,338
  329,995
  360,972
  393,274
  426,913
  461,912
  498,303
  536,127
Working capital, $m
  90
  -11
  -17
  -25
  -36
  -51
  -71
  -95
  -125
  -161
  -203
  -252
  -308
  -371
  -442
  -519
  -604
  -696
  -794
  -899
  -1,011
  -1,129
  -1,254
  -1,385
  -1,521
  -1,664
  -1,813
  -1,968
  -2,129
  -2,297
  -2,471
Total debt, $m
  72
  1,136
  1,761
  2,639
  3,834
  5,413
  7,446
  9,998
  13,132
  16,901
  21,350
  26,514
  32,419
  39,078
  46,497
  54,674
  63,600
  73,264
  83,649
  94,738
  106,515
  118,964
  132,073
  145,831
  160,233
  175,275
  190,960
  207,295
  224,291
  241,962
  260,329
Total liabilities, $m
  591
  1,147
  1,772
  2,650
  3,845
  5,424
  7,457
  10,009
  13,143
  16,912
  21,361
  26,525
  32,429
  39,088
  46,507
  54,684
  63,611
  73,275
  83,660
  94,749
  106,526
  118,975
  132,084
  145,842
  160,243
  175,286
  190,971
  207,306
  224,301
  241,973
  260,340
Total equity, $m
  957
  1,471
  2,273
  3,400
  4,933
  6,960
  9,568
  12,843
  16,864
  21,699
  27,408
  34,034
  41,610
  50,154
  59,674
  70,166
  81,620
  94,019
  107,344
  121,573
  136,684
  152,658
  169,478
  187,131
  205,609
  224,910
  245,036
  265,995
  287,802
  310,477
  334,044
Total liabilities and equity, $m
  1,548
  2,618
  4,045
  6,050
  8,778
  12,384
  17,025
  22,852
  30,007
  38,611
  48,769
  60,559
  74,039
  89,242
  106,181
  124,850
  145,231
  167,294
  191,004
  216,322
  243,210
  271,633
  301,562
  332,973
  365,852
  400,196
  436,007
  473,301
  512,103
  552,450
  594,384
Debt-to-equity ratio
  0.075
  0.770
  0.770
  0.780
  0.780
  0.780
  0.780
  0.780
  0.780
  0.780
  0.780
  0.780
  0.780
  0.780
  0.780
  0.780
  0.780
  0.780
  0.780
  0.780
  0.780
  0.780
  0.780
  0.780
  0.780
  0.780
  0.780
  0.780
  0.780
  0.780
  0.780
Adjusted equity ratio
  0.592
  0.562
  0.562
  0.562
  0.562
  0.562
  0.562
  0.562
  0.562
  0.562
  0.562
  0.562
  0.562
  0.562
  0.562
  0.562
  0.562
  0.562
  0.562
  0.562
  0.562
  0.562
  0.562
  0.562
  0.562
  0.562
  0.562
  0.562
  0.562
  0.562
  0.562

CASH FLOW

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Net income, $m
  -125
  -46
  3
  55
  125
  217
  334
  481
  659
  871
  1,119
  1,404
  1,727
  2,089
  2,490
  2,928
  3,404
  3,916
  4,464
  5,046
  5,662
  6,312
  6,994
  7,709
  8,455
  9,234
  10,045
  10,888
  11,766
  12,678
  13,625
Depreciation, amort., depletion, $m
  37
  236
  365
  546
  792
  1,117
  1,536
  2,061
  2,707
  3,483
  4,399
  5,462
  6,678
  8,050
  9,577
  11,261
  13,100
  15,090
  17,228
  19,512
  21,937
  24,501
  27,201
  30,034
  33,000
  36,097
  39,327
  42,691
  46,191
  49,830
  53,613
Funds from operations, $m
  -59
  190
  368
  600
  917
  1,334
  1,870
  2,542
  3,365
  4,353
  5,517
  6,866
  8,406
  10,139
  12,067
  14,189
  16,503
  19,005
  21,692
  24,558
  27,600
  30,813
  34,195
  37,742
  41,455
  45,331
  49,372
  53,580
  57,957
  62,508
  67,238
Change in working capital, $m
  -7
  -4
  -6
  -8
  -11
  -15
  -19
  -24
  -30
  -36
  -42
  -49
  -56
  -63
  -70
  -78
  -85
  -92
  -99
  -105
  -112
  -118
  -124
  -131
  -137
  -143
  -149
  -155
  -161
  -168
  -174
Cash from operations, $m
  -52
  194
  374
  609
  928
  1,349
  1,889
  2,566
  3,395
  4,389
  5,560
  6,915
  8,462
  10,202
  12,137
  14,267
  16,588
  19,097
  21,790
  24,663
  27,712
  30,931
  34,319
  37,873
  41,591
  45,474
  49,521
  53,735
  58,118
  62,676
  67,412
Maintenance CAPEX, $m
  0
  -148
  -236
  -365
  -546
  -792
  -1,117
  -1,536
  -2,061
  -2,707
  -3,483
  -4,399
  -5,462
  -6,678
  -8,050
  -9,577
  -11,261
  -13,100
  -15,090
  -17,228
  -19,512
  -21,937
  -24,501
  -27,201
  -30,034
  -33,000
  -36,097
  -39,327
  -42,691
  -46,191
  -49,830
New CAPEX, $m
  -507
  -884
  -1,287
  -1,808
  -2,461
  -3,253
  -4,186
  -5,256
  -6,453
  -7,761
  -9,162
  -10,635
  -12,159
  -13,713
  -15,278
  -16,839
  -18,383
  -19,901
  -21,386
  -22,836
  -24,253
  -25,637
  -26,995
  -28,333
  -29,657
  -30,977
  -32,301
  -33,639
  -34,999
  -36,391
  -37,824
Cash from investing activities, $m
  -235
  -1,032
  -1,523
  -2,173
  -3,007
  -4,045
  -5,303
  -6,792
  -8,514
  -10,468
  -12,645
  -15,034
  -17,621
  -20,391
  -23,328
  -26,416
  -29,644
  -33,001
  -36,476
  -40,064
  -43,765
  -47,574
  -51,496
  -55,534
  -59,691
  -63,977
  -68,398
  -72,966
  -77,690
  -82,582
  -87,654
Free cash flow, $m
  -287
  -838
  -1,149
  -1,564
  -2,078
  -2,696
  -3,414
  -4,226
  -5,119
  -6,079
  -7,085
  -8,119
  -9,160
  -10,189
  -11,191
  -12,150
  -13,056
  -13,903
  -14,685
  -15,402
  -16,053
  -16,643
  -17,177
  -17,660
  -18,100
  -18,503
  -18,878
  -19,232
  -19,572
  -19,907
  -20,242
Issuance/(repayment) of debt, $m
  62
  430
  625
  878
  1,195
  1,580
  2,033
  2,552
  3,134
  3,769
  4,449
  5,164
  5,904
  6,659
  7,419
  8,177
  8,927
  9,664
  10,385
  11,089
  11,777
  12,449
  13,109
  13,758
  14,401
  15,042
  15,685
  16,335
  16,995
  17,671
  18,367
Issuance/(repurchase) of shares, $m
  128
  601
  799
  1,072
  1,408
  1,810
  2,274
  2,794
  3,362
  3,965
  4,590
  5,223
  5,849
  6,455
  7,030
  7,564
  8,050
  8,484
  8,861
  9,183
  9,449
  9,662
  9,826
  9,945
  10,023
  10,067
  10,081
  10,071
  10,041
  9,997
  9,942
Cash from financing (excl. dividends), $m  
  189
  1,031
  1,424
  1,950
  2,603
  3,390
  4,307
  5,346
  6,496
  7,734
  9,039
  10,387
  11,753
  13,114
  14,449
  15,741
  16,977
  18,148
  19,246
  20,272
  21,226
  22,111
  22,935
  23,703
  24,424
  25,109
  25,766
  26,406
  27,036
  27,668
  28,309
Total cash flow (excl. dividends), $m
  -99
  193
  274
  386
  525
  694
  893
  1,121
  1,376
  1,655
  1,954
  2,268
  2,593
  2,925
  3,258
  3,591
  3,921
  4,244
  4,561
  4,870
  5,172
  5,468
  5,757
  6,043
  6,325
  6,607
  6,889
  7,174
  7,464
  7,761
  8,067
Retained Cash Flow (-), $m
  -22
  -601
  -802
  -1,126
  -1,533
  -2,027
  -2,608
  -3,275
  -4,021
  -4,836
  -5,709
  -6,627
  -7,576
  -8,544
  -9,519
  -10,492
  -11,454
  -12,399
  -13,325
  -14,229
  -15,111
  -15,974
  -16,820
  -17,653
  -18,478
  -19,301
  -20,126
  -20,959
  -21,807
  -22,674
  -23,567
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
 
  13
  20
  31
  47
  68
  96
  131
  176
  232
  298
  377
  468
  572
  689
  820
  964
  1,121
  1,292
  1,475
  1,670
  1,878
  2,098
  2,329
  2,571
  2,825
  3,090
  3,367
  3,655
  3,954
  4,266
Cash available for distribution, $m
 
  -407
  -527
  -741
  -1,008
  -1,333
  -1,715
  -2,154
  -2,644
  -3,181
  -3,755
  -4,358
  -4,983
  -5,620
  -6,261
  -6,901
  -7,533
  -8,155
  -8,764
  -9,358
  -9,939
  -10,506
  -11,063
  -11,611
  -12,153
  -12,694
  -13,237
  -13,785
  -14,343
  -14,913
  -15,500
Discount rate, %
 
  8.30
  8.72
  9.15
  9.61
  10.09
  10.59
  11.12
  11.68
  12.26
  12.88
  13.52
  14.20
  14.91
  15.65
  16.43
  17.26
  18.12
  19.02
  19.97
  20.97
  22.02
  23.12
  24.28
  25.49
  26.77
  28.11
  29.51
  30.99
  32.54
  34.16
PV of cash for distribution, $m
 
  -376
  -446
  -570
  -699
  -824
  -938
  -1,029
  -1,093
  -1,123
  -1,118
  -1,080
  -1,013
  -923
  -818
  -704
  -590
  -481
  -381
  -294
  -221
  -161
  -114
  -78
  -52
  -34
  -21
  -13
  -7
  -4
  -2
Current shareholders' claim on cash, %
  100
  51.7
  29.1
  17.4
  10.9
  7.2
  4.9
  3.4
  2.5
  1.9
  1.4
  1.1
  0.9
  0.7
  0.6
  0.5
  0.5
  0.4
  0.3
  0.3
  0.3
  0.3
  0.2
  0.2
  0.2
  0.2
  0.2
  0.2
  0.2
  0.1
  0.1

Scorpio Bulkers Inc. is a shipping company. The Company owns and operates newbuilding drybulk carriers with fuel-efficient specifications and carrying capacities of greater than 30,000 deadweight tons (dwt). The Company operates through two segments: Kamsarmax and Ultramax. Its Kamsarmax segment includes vessels ranging from approximately 77,500 DWT to 98,700 DWT. Its Ultramax segment includes vessels ranging from approximately 60,200 DWT to 64,000 DWT. All of its owned vessels have carrying capacities of greater than 60,000 dwt. Its vessels transport a range of bulk commodities, including ores, coal, grains and fertilizers, along shipping routes, and are employed primarily in the spot market or in spot market-oriented pools of similarly sized vessels. As of December 31, 2016, its operating fleet of 48 vessels consisted of 47 drybulk vessels and one chartered-in drybulk vessel. It also has a contract for the construction of one newbuilding drybulk vessel.

FINANCIAL RATIOS  of  Scorpio Bulkers (SALT)

Valuation Ratios
P/E Ratio -4.4
Price to Sales 7
Price to Book 0.6
Price to Tangible Book
Price to Cash Flow -10.5
Price to Free Cash Flow -1
Growth Rates
Sales Growth Rate 23.8%
Sales - 3 Yr. Growth Rate %
EPS Growth Rate %
EPS - 3 Yr. Growth Rate %
Capital Spending Gr. Rate -47.6%
Cap. Spend. - 3 Yr. Gr. Rate 6.4%
Financial Strength
Quick Ratio NaN
Current Ratio 0
LT Debt to Equity 7.5%
Total Debt to Equity 7.5%
Interest Coverage -4
Management Effectiveness
Return On Assets -6.8%
Ret/ On Assets - 3 Yr. Avg. -17.3%
Return On Total Capital -12.3%
Ret/ On T. Cap. - 3 Yr. Avg. -22.3%
Return On Equity -13.2%
Return On Equity - 3 Yr. Avg. -23.7%
Asset Turnover 0.1
Profitability Ratios
Gross Margin 0%
Gross Margin - 3 Yr. Avg. 46.9%
EBITDA Margin -83.3%
EBITDA Margin - 3 Yr. Avg. -362.8%
Operating Margin -129.5%
Oper. Margin - 3 Yr. Avg. -382.5%
Pre-Tax Margin -160.3%
Pre-Tax Margin - 3 Yr. Avg. -403.4%
Net Profit Margin -160.3%
Net Profit Margin - 3 Yr. Avg. -403.4%
Effective Tax Rate 0%
Eff/ Tax Rate - 3 Yr. Avg. 0%
Payout Ratio 0%

SALT stock valuation input parameters

Revenue. Company's revenue (or sales) is always the starting point of any cash flow forecast. In the SALT stock intrinsic value calculation we used $162 million for the last fiscal year's total revenue generated by Scorpio Bulkers. The default revenue input number comes from 2016 income statement of Scorpio Bulkers. 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 SALT 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 8.3%, whose default value for SALT is calculated based on our internal credit rating of Scorpio Bulkers, 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 Scorpio Bulkers.
    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 SALT stock the variable cost ratio is equal to 45.6%.

Fixed operating expenses is just that - expenses that are not dependant on the volume of production. They are set to $146 million in the base year in the intrinsic value calculation for SALT 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 5.4% for Scorpio Bulkers.

Corporate tax rate of 27% is the nominal tax rate for Scorpio Bulkers. 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 SALT stock is equal to 7.8%.

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 SALT are equal to 911.1%.

Life of production assets of 10 years is the average useful life of capital assets used in Scorpio Bulkers 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 SALT is equal to -4.2%. 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 - $917 million for Scorpio Bulkers - 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 72 million for Scorpio Bulkers 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 Scorpio Bulkers at the current share price and the inputted number of shares is $0.5 billion.

RELATED COMPANIES Price Int.Val. Rating
SHIP Seanergy Marit 0.920 6.60  str.buy
SB Safe Bulkers 3.42 1.13  str.sell
NMM Navios Maritim 2.03 0.05  str.sell
SBLK Star Bulk Carr 12.52 4.32  str.sell
DSX Diana Shipping 4.38 1.63  str.sell

COMPANY NEWS

▶ Scorpio Bulkers: 1Q Earnings Snapshot   [06:46AM  Associated Press]
▶ Scorpio Bulkers Inc. to Announce First Quarter 2018 Results   [Apr-13-18 04:15PM  GlobeNewswire]
▶ Scorpio Bulkers reports 4Q loss   [Feb-05-18 08:31AM  Associated Press]
▶ What Is Scorpio Bulkers Incs (NYSE:SALT) Share Price Doing?   [Dec-28-17 06:05AM  Simply Wall St.]
▶ Scorpio Bulkers Inc (SALT): Time For A Financial Health Check   [Nov-23-17 06:51PM  Simply Wall St.]
▶ 2 Stocks With 50% Upside: Evermore Global   [06:00AM  Investopedia]
▶ 2 Shippers With 50% Upside   [Nov-07-17 10:22AM  Barrons.com]
▶ Scorpio Bulkers reports 3Q loss   [Oct-23-17 07:35AM  Associated Press]
▶ Scorpio Bulkers Inc. To Announce Third Quarter 2017 Results   [Oct-13-17 10:00AM  GlobeNewswire]
▶ [$$] Shipowners Rejoice Over Rising Demand for Commodities   [12:37AM  The Wall Street Journal]
▶ Why Scorpio Bulkers Inc Stock Tumbled 22% in May   [Jun-07-17 03:40PM  Motley Fool]
▶ Scorpio Bulkers reports 1Q loss   [07:38AM  Associated Press]
▶ Shipping stocks rocket after analyst calls the bottom   [Mar-29-17 07:36AM  MarketWatch]
▶ [$$] Finding Value in European Conglomerates   [Mar-18-17 12:16AM  at Barrons.com]
▶ Shipping Stocks Encounter Volatility   [Mar-16-17 03:39PM  Investopedia]
▶ Shipping Stocks Encounter Volatility   [03:39PM  at Investopedia]
Financial statements of SALT
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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