Intrinsic value of Scorpio Bulkers - SALT

Previous Close

$7.80

  Intrinsic Value

$3.18

stock screener

  Rating & Target

str. sell

-59%

  Value-price divergence*

0%

Previous close

$7.80

 
Intrinsic value

$3.18

 
Up/down potential

-59%

 
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 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

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 0.6

 

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
  125
  193
  288
  418
  590
  812
  1,089
  1,430
  1,840
  2,325
  2,887
  3,529
  4,254
  5,061
  5,951
  6,923
  7,974
  9,105
  10,311
  11,593
  12,948
  14,374
  15,872
  17,439
  19,076
  20,783
  22,561
  24,410
  26,333
  28,332
Variable operating expenses, $m
 
  1,098
  1,696
  2,536
  3,680
  5,192
  7,137
  9,580
  12,579
  16,187
  20,445
  25,388
  31,040
  37,413
  44,514
  52,341
  60,885
  70,134
  80,074
  90,688
  101,960
  113,876
  126,423
  139,592
  153,376
  167,773
  182,787
  198,421
  214,688
  231,602
  249,182
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
  179
  1,098
  1,696
  2,536
  3,680
  5,192
  7,137
  9,580
  12,579
  16,187
  20,445
  25,388
  31,040
  37,413
  44,514
  52,341
  60,885
  70,134
  80,074
  90,688
  101,960
  113,876
  126,423
  139,592
  153,376
  167,773
  182,787
  198,421
  214,688
  231,602
  249,182
Operating income, $m
  -101
  -973
  -1,503
  -2,248
  -3,261
  -4,601
  -6,326
  -8,491
  -11,149
  -14,346
  -18,121
  -22,502
  -27,510
  -33,159
  -39,453
  -46,390
  -53,962
  -62,160
  -70,970
  -80,377
  -90,367
  -100,928
  -112,049
  -123,720
  -135,937
  -148,697
  -162,004
  -175,861
  -190,278
  -205,269
  -220,850
EBITDA, $m
  -64
  -973
  -1,503
  -2,248
  -3,261
  -4,601
  -6,326
  -8,491
  -11,149
  -14,346
  -18,121
  -22,502
  -27,510
  -33,159
  -39,453
  -46,390
  -53,962
  -62,160
  -70,970
  -80,377
  -90,367
  -100,928
  -112,049
  -123,720
  -135,937
  -148,697
  -162,004
  -175,861
  -190,278
  -205,269
  -220,850
Interest expense (income), $m
  23
  23
  136
  299
  530
  843
  1,257
  1,791
  2,460
  3,282
  4,271
  5,438
  6,792
  8,341
  10,088
  12,034
  14,178
  16,520
  19,055
  21,779
  24,687
  27,776
  31,042
  34,480
  38,089
  41,867
  45,812
  49,926
  54,211
  58,669
  63,304
Earnings before tax, $m
  -125
  -996
  -1,639
  -2,547
  -3,791
  -5,444
  -7,583
  -10,282
  -13,609
  -17,628
  -22,391
  -27,939
  -34,303
  -41,500
  -49,541
  -58,423
  -68,141
  -78,680
  -90,024
  -102,155
  -115,055
  -128,705
  -143,091
  -158,200
  -174,026
  -190,564
  -207,816
  -225,787
  -244,489
  -263,938
  -284,154
Tax expense, $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
Net income, $m
  -125
  -996
  -1,639
  -2,547
  -3,791
  -5,444
  -7,583
  -10,282
  -13,609
  -17,628
  -22,391
  -27,939
  -34,303
  -41,500
  -49,541
  -58,423
  -68,141
  -78,680
  -90,024
  -102,155
  -115,055
  -128,705
  -143,091
  -158,200
  -174,026
  -190,564
  -207,816
  -225,787
  -244,489
  -263,938
  -284,154

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
  2,311
  3,571
  5,340
  7,748
  10,931
  15,028
  20,172
  26,487
  34,082
  43,049
  53,457
  65,356
  78,776
  93,728
  110,207
  128,198
  147,673
  168,602
  190,951
  214,685
  239,775
  266,193
  293,921
  322,944
  353,259
  384,870
  417,791
  452,042
  487,656
  524,672
Adjusted assets (=assets-cash), $m
  1,445
  2,311
  3,571
  5,340
  7,748
  10,931
  15,028
  20,172
  26,487
  34,082
  43,049
  53,457
  65,356
  78,776
  93,728
  110,207
  128,198
  147,673
  168,602
  190,951
  214,685
  239,775
  266,193
  293,921
  322,944
  353,259
  384,870
  417,791
  452,042
  487,656
  524,672
Revenue / Adjusted assets
  0.054
  0.054
  0.054
  0.054
  0.054
  0.054
  0.054
  0.054
  0.054
  0.054
  0.054
  0.054
  0.054
  0.054
  0.054
  0.054
  0.054
  0.054
  0.054
  0.054
  0.054
  0.054
  0.054
  0.054
  0.054
  0.054
  0.054
  0.054
  0.054
  0.054
  0.054
Average production assets, $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
Working capital, $m
  90
  -12
  -19
  -29
  -42
  -59
  -81
  -109
  -143
  -184
  -232
  -289
  -353
  -425
  -506
  -595
  -692
  -797
  -910
  -1,031
  -1,159
  -1,295
  -1,437
  -1,587
  -1,744
  -1,908
  -2,078
  -2,256
  -2,441
  -2,633
  -2,833
Total debt, $m
  72
  425
  939
  1,661
  2,643
  3,942
  5,613
  7,712
  10,289
  13,388
  17,046
  21,292
  26,147
  31,623
  37,723
  44,447
  51,787
  59,733
  68,272
  77,390
  87,074
  97,310
  108,089
  119,402
  131,243
  143,612
  156,509
  169,941
  183,915
  198,446
  213,548
Total liabilities, $m
  591
  943
  1,457
  2,179
  3,161
  4,460
  6,131
  8,230
  10,807
  13,906
  17,564
  21,810
  26,665
  32,141
  38,241
  44,965
  52,305
  60,251
  68,790
  77,908
  87,592
  97,828
  108,607
  119,920
  131,761
  144,130
  157,027
  170,459
  184,433
  198,964
  214,066
Total equity, $m
  957
  1,368
  2,114
  3,161
  4,587
  6,471
  8,897
  11,942
  15,680
  20,177
  25,485
  31,646
  38,691
  46,635
  55,487
  65,243
  75,893
  87,422
  99,812
  113,043
  127,094
  141,947
  157,586
  174,001
  191,183
  209,129
  227,843
  247,332
  267,609
  288,692
  310,606
Total liabilities and equity, $m
  1,548
  2,311
  3,571
  5,340
  7,748
  10,931
  15,028
  20,172
  26,487
  34,083
  43,049
  53,456
  65,356
  78,776
  93,728
  110,208
  128,198
  147,673
  168,602
  190,951
  214,686
  239,775
  266,193
  293,921
  322,944
  353,259
  384,870
  417,791
  452,042
  487,656
  524,672
Debt-to-equity ratio
  0.075
  0.310
  0.440
  0.530
  0.580
  0.610
  0.630
  0.650
  0.660
  0.660
  0.670
  0.670
  0.680
  0.680
  0.680
  0.680
  0.680
  0.680
  0.680
  0.680
  0.690
  0.690
  0.690
  0.690
  0.690
  0.690
  0.690
  0.690
  0.690
  0.690
  0.690
Adjusted equity ratio
  0.592
  0.592
  0.592
  0.592
  0.592
  0.592
  0.592
  0.592
  0.592
  0.592
  0.592
  0.592
  0.592
  0.592
  0.592
  0.592
  0.592
  0.592
  0.592
  0.592
  0.592
  0.592
  0.592
  0.592
  0.592
  0.592
  0.592
  0.592
  0.592
  0.592
  0.592

CASH FLOW

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Net income, $m
  -125
  -996
  -1,639
  -2,547
  -3,791
  -5,444
  -7,583
  -10,282
  -13,609
  -17,628
  -22,391
  -27,939
  -34,303
  -41,500
  -49,541
  -58,423
  -68,141
  -78,680
  -90,024
  -102,155
  -115,055
  -128,705
  -143,091
  -158,200
  -174,026
  -190,564
  -207,816
  -225,787
  -244,489
  -263,938
  -284,154
Depreciation, amort., depletion, $m
  37
  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
Funds from operations, $m
  -59
  -996
  -1,639
  -2,547
  -3,791
  -5,444
  -7,583
  -10,282
  -13,609
  -17,628
  -22,391
  -27,939
  -34,303
  -41,500
  -49,541
  -58,423
  -68,141
  -78,680
  -90,024
  -102,155
  -115,055
  -128,705
  -143,091
  -158,200
  -174,026
  -190,564
  -207,816
  -225,787
  -244,489
  -263,938
  -284,154
Change in working capital, $m
  -7
  -5
  -7
  -10
  -13
  -17
  -22
  -28
  -34
  -41
  -48
  -56
  -64
  -72
  -81
  -89
  -97
  -105
  -113
  -121
  -128
  -135
  -143
  -150
  -157
  -164
  -171
  -178
  -185
  -192
  -200
Cash from operations, $m
  -52
  -991
  -1,632
  -2,538
  -3,778
  -5,427
  -7,561
  -10,254
  -13,575
  -17,587
  -22,343
  -27,883
  -34,238
  -41,428
  -49,460
  -58,334
  -68,044
  -78,575
  -89,911
  -102,035
  -114,927
  -128,569
  -142,948
  -158,051
  -173,869
  -190,400
  -207,645
  -225,609
  -244,304
  -263,746
  -283,954
Maintenance CAPEX, $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
New CAPEX, $m
  -507
  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 investing activities, $m
  -235
  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
Free cash flow, $m
  -287
  -991
  -1,632
  -2,538
  -3,778
  -5,427
  -7,561
  -10,254
  -13,575
  -17,587
  -22,343
  -27,883
  -34,238
  -41,428
  -49,460
  -58,334
  -68,044
  -78,575
  -89,911
  -102,035
  -114,927
  -128,569
  -142,948
  -158,051
  -173,869
  -190,400
  -207,645
  -225,609
  -244,304
  -263,746
  -283,954
Issuance/(repayment) of debt, $m
  62
  353
  514
  722
  982
  1,299
  1,671
  2,099
  2,577
  3,099
  3,658
  4,246
  4,855
  5,475
  6,100
  6,724
  7,340
  7,946
  8,539
  9,118
  9,684
  10,237
  10,779
  11,313
  11,842
  12,369
  12,897
  13,431
  13,975
  14,530
  15,102
Issuance/(repurchase) of shares, $m
  128
  1,509
  2,384
  3,595
  5,217
  7,329
  10,008
  13,327
  17,348
  22,125
  27,699
  34,101
  41,347
  49,445
  58,392
  68,179
  78,791
  90,209
  102,414
  115,386
  129,106
  143,558
  158,730
  174,615
  191,208
  208,511
  226,530
  245,276
  264,766
  285,021
  306,068
Cash from financing (excl. dividends), $m  
  189
  1,862
  2,898
  4,317
  6,199
  8,628
  11,679
  15,426
  19,925
  25,224
  31,357
  38,347
  46,202
  54,920
  64,492
  74,903
  86,131
  98,155
  110,953
  124,504
  138,790
  153,795
  169,509
  185,928
  203,050
  220,880
  239,427
  258,707
  278,741
  299,551
  321,170
Total cash flow (excl. dividends), $m
  -99
  871
  1,266
  1,779
  2,421
  3,200
  4,119
  5,172
  6,349
  7,636
  9,015
  10,464
  11,964
  13,492
  15,033
  16,568
  18,087
  19,580
  21,042
  22,469
  23,863
  25,225
  26,561
  27,877
  29,180
  30,479
  31,782
  33,098
  34,436
  35,806
  37,216
Retained Cash Flow (-), $m
  -22
  -1,509
  -2,384
  -3,595
  -5,217
  -7,329
  -10,008
  -13,327
  -17,348
  -22,125
  -27,699
  -34,101
  -41,347
  -49,445
  -58,392
  -68,179
  -78,791
  -90,209
  -102,414
  -115,386
  -129,106
  -143,558
  -158,730
  -174,615
  -191,208
  -208,511
  -226,530
  -245,276
  -264,766
  -285,021
  -306,068
Prev. year cash balance distribution, $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
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
 
  -536
  -1,118
  -1,816
  -2,796
  -4,128
  -5,890
  -8,155
  -10,999
  -14,488
  -18,684
  -23,637
  -29,383
  -35,952
  -43,359
  -51,611
  -60,704
  -70,629
  -81,372
  -92,917
  -105,243
  -118,333
  -132,169
  -146,738
  -162,028
  -178,032
  -194,748
  -212,178
  -230,330
  -249,215
  -268,852
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
 
  -514
  -1,023
  -1,580
  -2,302
  -3,200
  -4,274
  -5,509
  -6,874
  -8,323
  -9,796
  -11,225
  -12,539
  -13,670
  -14,557
  -15,152
  -15,426
  -15,368
  -14,986
  -14,307
  -13,373
  -12,240
  -10,967
  -9,617
  -8,252
  -6,926
  -5,682
  -4,554
  -3,564
  -2,720
  -2,024
Current shareholders' claim on cash, %
  100
  28.4
  8.1
  2.4
  0.7
  0.2
  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
  0.0
  0.0
  0.0
  0.0
  0.0

Scorpio Bulkers Inc., together with its subsidiaries, engages in the marine transportation of dry bulk commodities. Its vessels transport a range of major and minor bulk commodities, including ores, coal, grains, and fertilizers along worldwide shipping routes. As of Feb 29, 2016, the company owned 33 vessels consisting of 14 Kamsarmax vessels and 19 Ultramax vessels; had time charters-in 3 dry bulk vessels comprising 1 Supramax, 1 Panamax, and 1 Kamsarmax vessels); and contracted for 16 dry bulk vessels, including 7 Kamsarmax and 9 Ultramax from shipyards in Japan and China. Scorpio Bulkers Inc. was founded in 2013 and is based in Monaco.

FINANCIAL RATIOS  of  Scorpio Bulkers (SALT)

Valuation Ratios
P/E Ratio -4.7
Price to Sales 7.5
Price to Book 0.6
Price to Tangible Book
Price to Cash Flow -11.3
Price to Free Cash Flow -1.1
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 $78 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 4.3%, 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 879.5%.

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 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 31.9% 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 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 SALT are equal to 0%.

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 -10%. 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 - $957 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 75.299 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 $0.6 billion.

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COMPANY NEWS

▶ 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]
▶ [$$] Finding Value in European Conglomerates   [Mar-18-17 12:16AM  at Barrons.com]
▶ Shipping Stocks Encounter Volatility   [Mar-16-17 03:39PM  Investopedia]
▶ Shipping Stocks Encounter Volatility   [03:39PM  at Investopedia]
▶ Why Scorpio Bulkers Inc. Stock Sailed 42% in January   [Feb-06-17 03:15PM  at Motley Fool]
▶ Why Shipping Stocks Surged -- and DryShips Dropped -- Today   [Jan-18-17 07:56PM  at Motley Fool]
▶ Is Scorpio Bulkers Inc (SALT) a Good Stock to Buy?   [01:35AM  at Insider Monkey]
▶ [$$] Dry-Bulk Shipping Owners Get Reprieve as Rates Rebound   [Nov-25-16 12:16AM  at The Wall Street Journal]
▶ [$$] Dry-Bulk Shipping Owners Get Reprieve as Rates Rebound   [Nov-24-16 12:54AM  at The Wall Street Journal]
▶ Why Small Stocks Are Fueling Giant Returns   [02:16PM  at Investopedia]
▶ DryShips: What the Heck Is Going On?!?!   [10:19AM  at Barrons.com]
▶ Why Scorpio Bulkers Stock Shot to the Stars Friday   [Nov-11-16 06:47PM  at Motley Fool]
Stock chart of SALT 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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