Intrinsic value of U.S. Silica Holdings - SLCA

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$37.21

  Intrinsic Value

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  Rating & Target

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  Value-price divergence*

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Previous close

$37.21

 
Intrinsic value

$1,088

 
Up/down potential

+999%

 
Rating

str. buy

 
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 SLCA 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 3.0

 

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, %
  -12.91
  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
  560
  896
  1,384
  2,070
  3,004
  4,238
  5,826
  7,821
  10,269
  13,213
  16,690
  20,725
  25,338
  30,541
  36,338
  42,727
  49,701
  57,252
  65,366
  74,030
  83,232
  92,959
  103,201
  113,951
  125,203
  136,956
  149,211
  161,974
  175,253
  189,060
  203,411
Variable operating expenses, $m
 
  157
  229
  330
  469
  651
  886
  1,181
  1,544
  1,979
  2,494
  3,067
  3,749
  4,519
  5,377
  6,322
  7,354
  8,471
  9,672
  10,954
  12,315
  13,755
  15,270
  16,861
  18,526
  20,265
  22,078
  23,966
  25,931
  27,974
  30,098
Fixed operating expenses, $m
 
  518
  531
  544
  557
  571
  586
  600
  615
  631
  646
  663
  679
  696
  714
  731
  750
  768
  788
  807
  828
  848
  869
  891
  913
  936
  960
  984
  1,008
  1,033
  1,059
Total operating expenses, $m
  613
  675
  760
  874
  1,026
  1,222
  1,472
  1,781
  2,159
  2,610
  3,140
  3,730
  4,428
  5,215
  6,091
  7,053
  8,104
  9,239
  10,460
  11,761
  13,143
  14,603
  16,139
  17,752
  19,439
  21,201
  23,038
  24,950
  26,939
  29,007
  31,157
Operating income, $m
  -54
  222
  625
  1,196
  1,978
  3,015
  4,354
  6,039
  8,110
  10,604
  13,550
  16,996
  20,910
  25,326
  30,247
  35,673
  41,598
  48,012
  54,906
  62,269
  70,089
  78,356
  87,062
  96,199
  105,764
  115,755
  126,174
  137,024
  148,314
  160,053
  172,254
EBITDA, $m
  14
  336
  788
  1,428
  2,304
  3,465
  4,964
  6,849
  9,166
  11,955
  15,250
  19,077
  23,455
  28,394
  33,897
  39,965
  46,590
  53,763
  61,472
  69,705
  78,449
  87,694
  97,428
  107,645
  118,340
  129,512
  141,162
  153,294
  165,918
  179,044
  192,687
Interest expense (income), $m
  22
  22
  43
  74
  116
  175
  252
  351
  475
  627
  811
  1,027
  1,279
  1,566
  1,890
  2,252
  2,650
  3,084
  3,555
  4,060
  4,600
  5,173
  5,779
  6,418
  7,087
  7,788
  8,521
  9,284
  10,080
  10,907
  11,767
Earnings before tax, $m
  -78
  199
  581
  1,122
  1,861
  2,841
  4,103
  5,688
  7,635
  9,976
  12,739
  15,968
  19,631
  23,760
  28,357
  33,422
  38,948
  44,928
  51,352
  58,209
  65,489
  73,183
  81,282
  89,781
  98,677
  107,967
  117,653
  127,740
  138,234
  149,146
  160,487
Tax expense, $m
  -37
  54
  157
  303
  503
  767
  1,108
  1,536
  2,062
  2,694
  3,439
  4,311
  5,300
  6,415
  7,656
  9,024
  10,516
  12,131
  13,865
  15,716
  17,682
  19,759
  21,946
  24,241
  26,643
  29,151
  31,766
  34,490
  37,323
  40,269
  43,332
Net income, $m
  -41
  145
  424
  819
  1,359
  2,074
  2,995
  4,153
  5,574
  7,283
  9,299
  11,657
  14,331
  17,344
  20,701
  24,398
  28,432
  32,797
  37,487
  42,492
  47,807
  53,423
  59,336
  65,540
  72,034
  78,816
  85,887
  93,250
  100,911
  108,877
  117,156

BALANCE SHEET

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Cash and short-term investments, $m
  711
  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
  2,073
  2,180
  3,368
  5,037
  7,309
  10,311
  14,176
  19,028
  24,985
  32,150
  40,608
  50,425
  61,650
  74,309
  88,413
  103,958
  120,928
  139,299
  159,041
  180,122
  202,510
  226,177
  251,097
  277,252
  304,630
  333,226
  363,045
  394,098
  426,407
  460,001
  494,918
Adjusted assets (=assets-cash), $m
  1,362
  2,180
  3,368
  5,037
  7,309
  10,311
  14,176
  19,028
  24,985
  32,150
  40,608
  50,425
  61,650
  74,309
  88,413
  103,958
  120,928
  139,299
  159,041
  180,122
  202,510
  226,177
  251,097
  277,252
  304,630
  333,226
  363,045
  394,098
  426,407
  460,001
  494,918
Revenue / Adjusted assets
  0.411
  0.411
  0.411
  0.411
  0.411
  0.411
  0.411
  0.411
  0.411
  0.411
  0.411
  0.411
  0.411
  0.411
  0.411
  0.411
  0.411
  0.411
  0.411
  0.411
  0.411
  0.411
  0.411
  0.411
  0.411
  0.411
  0.411
  0.411
  0.411
  0.411
  0.411
Average production assets, $m
  754
  1,206
  1,863
  2,787
  4,043
  5,704
  7,842
  10,526
  13,822
  17,785
  22,464
  27,896
  34,105
  41,108
  48,910
  57,510
  66,898
  77,061
  87,982
  99,644
  112,030
  125,123
  138,909
  153,378
  168,523
  184,343
  200,838
  218,017
  235,891
  254,475
  273,792
Working capital, $m
  783
  126
  195
  292
  424
  598
  821
  1,103
  1,448
  1,863
  2,353
  2,922
  3,573
  4,306
  5,124
  6,024
  7,008
  8,072
  9,217
  10,438
  11,736
  13,107
  14,551
  16,067
  17,654
  19,311
  21,039
  22,838
  24,711
  26,658
  28,681
Total debt, $m
  516
  985
  1,676
  2,648
  3,970
  5,717
  7,966
  10,790
  14,257
  18,427
  23,350
  29,064
  35,596
  42,964
  51,172
  60,219
  70,096
  80,788
  92,278
  104,547
  117,577
  131,351
  145,855
  161,077
  177,011
  193,654
  211,008
  229,081
  247,885
  267,437
  287,758
Total liabilities, $m
  800
  1,269
  1,960
  2,932
  4,254
  6,001
  8,250
  11,074
  14,541
  18,711
  23,634
  29,348
  35,880
  43,248
  51,456
  60,503
  70,380
  81,072
  92,562
  104,831
  117,861
  131,635
  146,139
  161,361
  177,295
  193,938
  211,292
  229,365
  248,169
  267,721
  288,042
Total equity, $m
  1,273
  911
  1,408
  2,106
  3,055
  4,310
  5,925
  7,954
  10,444
  13,439
  16,974
  21,078
  25,770
  31,061
  36,957
  43,454
  50,548
  58,227
  66,479
  75,291
  84,649
  94,542
  104,959
  115,891
  127,335
  139,288
  151,753
  164,733
  178,238
  192,280
  206,876
Total liabilities and equity, $m
  2,073
  2,180
  3,368
  5,038
  7,309
  10,311
  14,175
  19,028
  24,985
  32,150
  40,608
  50,426
  61,650
  74,309
  88,413
  103,957
  120,928
  139,299
  159,041
  180,122
  202,510
  226,177
  251,098
  277,252
  304,630
  333,226
  363,045
  394,098
  426,407
  460,001
  494,918
Debt-to-equity ratio
  0.405
  1.080
  1.190
  1.260
  1.300
  1.330
  1.340
  1.360
  1.370
  1.370
  1.380
  1.380
  1.380
  1.380
  1.380
  1.390
  1.390
  1.390
  1.390
  1.390
  1.390
  1.390
  1.390
  1.390
  1.390
  1.390
  1.390
  1.390
  1.390
  1.390
  1.390
Adjusted equity ratio
  0.413
  0.418
  0.418
  0.418
  0.418
  0.418
  0.418
  0.418
  0.418
  0.418
  0.418
  0.418
  0.418
  0.418
  0.418
  0.418
  0.418
  0.418
  0.418
  0.418
  0.418
  0.418
  0.418
  0.418
  0.418
  0.418
  0.418
  0.418
  0.418
  0.418
  0.418

CASH FLOW

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Net income, $m
  -41
  145
  424
  819
  1,359
  2,074
  2,995
  4,153
  5,574
  7,283
  9,299
  11,657
  14,331
  17,344
  20,701
  24,398
  28,432
  32,797
  37,487
  42,492
  47,807
  53,423
  59,336
  65,540
  72,034
  78,816
  85,887
  93,250
  100,911
  108,877
  117,156
Depreciation, amort., depletion, $m
  68
  114
  163
  232
  326
  450
  609
  810
  1,056
  1,351
  1,701
  2,082
  2,545
  3,068
  3,650
  4,292
  4,992
  5,751
  6,566
  7,436
  8,360
  9,338
  10,366
  11,446
  12,576
  13,757
  14,988
  16,270
  17,604
  18,991
  20,432
Funds from operations, $m
  -10
  260
  588
  1,051
  1,685
  2,524
  3,604
  4,962
  6,629
  8,634
  11,000
  13,739
  16,876
  20,412
  24,351
  28,690
  33,424
  38,548
  44,053
  49,929
  56,167
  62,761
  69,702
  76,986
  84,610
  92,573
  100,875
  109,520
  118,515
  127,867
  137,588
Change in working capital, $m
  -10
  47
  69
  97
  132
  174
  224
  281
  345
  415
  490
  569
  650
  734
  817
  901
  983
  1,065
  1,144
  1,222
  1,297
  1,372
  1,444
  1,516
  1,587
  1,657
  1,728
  1,800
  1,872
  1,947
  2,023
Cash from operations, $m
  0
  383
  519
  955
  1,553
  2,350
  3,380
  4,681
  6,284
  8,219
  10,510
  13,170
  16,225
  19,679
  23,533
  27,789
  32,441
  37,484
  42,908
  48,707
  54,870
  61,389
  68,258
  75,471
  83,024
  90,915
  99,147
  107,720
  116,642
  125,920
  135,564
Maintenance CAPEX, $m
  0
  -56
  -90
  -139
  -208
  -302
  -426
  -585
  -786
  -1,031
  -1,327
  -1,676
  -2,082
  -2,545
  -3,068
  -3,650
  -4,292
  -4,992
  -5,751
  -6,566
  -7,436
  -8,360
  -9,338
  -10,366
  -11,446
  -12,576
  -13,757
  -14,988
  -16,270
  -17,604
  -18,991
New CAPEX, $m
  -47
  -453
  -657
  -923
  -1,257
  -1,661
  -2,138
  -2,684
  -3,295
  -3,964
  -4,679
  -5,431
  -6,209
  -7,003
  -7,802
  -8,600
  -9,388
  -10,163
  -10,921
  -11,662
  -12,385
  -13,093
  -13,786
  -14,469
  -15,145
  -15,820
  -16,496
  -17,179
  -17,874
  -18,584
  -19,316
Cash from investing activities, $m
  -202
  -509
  -747
  -1,062
  -1,465
  -1,963
  -2,564
  -3,269
  -4,081
  -4,995
  -6,006
  -7,107
  -8,291
  -9,548
  -10,870
  -12,250
  -13,680
  -15,155
  -16,672
  -18,228
  -19,821
  -21,453
  -23,124
  -24,835
  -26,591
  -28,396
  -30,253
  -32,167
  -34,144
  -36,188
  -38,307
Free cash flow, $m
  -202
  -126
  -228
  -108
  88
  387
  817
  1,411
  2,203
  3,224
  4,504
  6,062
  7,934
  10,130
  12,663
  15,539
  18,761
  22,328
  26,236
  30,479
  35,048
  39,936
  45,135
  50,635
  56,432
  62,519
  68,894
  75,554
  82,499
  89,732
  97,258
Issuance/(repayment) of debt, $m
  -6
  476
  691
  971
  1,322
  1,748
  2,249
  2,824
  3,467
  4,170
  4,923
  5,714
  6,533
  7,368
  8,209
  9,047
  9,877
  10,692
  11,490
  12,269
  13,030
  13,774
  14,504
  15,222
  15,934
  16,643
  17,354
  18,073
  18,804
  19,552
  20,322
Issuance/(repurchase) of shares, $m
  684
  0
  34
  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  
  650
  476
  725
  971
  1,322
  1,748
  2,249
  2,824
  3,467
  4,170
  4,923
  5,714
  6,533
  7,368
  8,209
  9,047
  9,877
  10,692
  11,490
  12,269
  13,030
  13,774
  14,504
  15,222
  15,934
  16,643
  17,354
  18,073
  18,804
  19,552
  20,322
Total cash flow (excl. dividends), $m
  449
  350
  463
  864
  1,410
  2,134
  3,066
  4,236
  5,670
  7,394
  9,426
  11,776
  14,467
  17,498
  20,872
  24,586
  28,638
  33,020
  37,726
  42,748
  48,078
  53,710
  59,638
  65,858
  72,366
  79,162
  86,248
  93,627
  101,303
  109,284
  117,579
Retained Cash Flow (-), $m
  -889
  -342
  -497
  -698
  -949
  -1,255
  -1,615
  -2,028
  -2,490
  -2,995
  -3,535
  -4,104
  -4,692
  -5,291
  -5,895
  -6,498
  -7,093
  -7,679
  -8,252
  -8,812
  -9,358
  -9,893
  -10,417
  -10,933
  -11,444
  -11,953
  -12,464
  -12,980
  -13,505
  -14,042
  -14,595
Prev. year cash balance distribution, $m
 
  704
  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
 
  711
  0
  166
  461
  879
  1,451
  2,207
  3,180
  4,399
  5,891
  7,672
  9,775
  12,207
  14,976
  18,089
  21,544
  25,341
  29,474
  33,936
  38,720
  43,818
  49,221
  54,925
  60,922
  67,209
  73,784
  80,646
  87,798
  95,242
  102,984
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
 
  682
  0
  144
  380
  681
  1,053
  1,491
  1,988
  2,527
  3,088
  3,643
  4,171
  4,641
  5,028
  5,310
  5,475
  5,514
  5,428
  5,225
  4,920
  4,532
  4,084
  3,600
  3,103
  2,615
  2,153
  1,731
  1,358
  1,040
  775
Current shareholders' claim on cash, %
  100
  100.0
  98.4
  98.4
  98.4
  98.4
  98.4
  98.4
  98.4
  98.4
  98.4
  98.4
  98.4
  98.4
  98.4
  98.4
  98.4
  98.4
  98.4
  98.4
  98.4
  98.4
  98.4
  98.4
  98.4
  98.4
  98.4
  98.4
  98.4
  98.4
  98.4

U.S. Silica Holdings, Inc. produces and sells commercial silica in the United States. The company operates through two segments, Oil & Gas Proppants and Industrial & Specialty Products. It offers whole grain commercial silica products to be used as fracturing sand in connection with oil and natural gas recovery; and resin coated proppants, as well as sells its whole grain silica products in various size distributions, grain shapes, and chemical purity levels for manufacturing glass products. The company also provides ground commercial silica products for use in plastics, rubber, polishes, cleansers, paints, glazes, textile fiberglass, and precision castings; and fine ground silica for use in premium paints, specialty coatings, sealants, silicone rubber, and epoxies. In addition, it offers other industrial mineral products, such as aplite, a mineral used to produce container glass and insulation fiberglass; and adsorbent made from a mixture of silica and magnesium for preparative and analytical chromatography applications. The company serves oil and gas recovery markets; and industrial end markets with customers involved in the production of glass, building products, foundry products, chemicals, and fillers and extenders. The company, formerly known as GGC USS Holdings, Inc., was incorporated in 2008 and is headquartered in Frederick, Maryland.

FINANCIAL RATIOS  of  U.S. Silica Holdings (SLCA)

Valuation Ratios
P/E Ratio -73.5
Price to Sales 5.4
Price to Book 2.4
Price to Tangible Book
Price to Cash Flow 0
Price to Free Cash Flow -64.2
Growth Rates
Sales Growth Rate -12.9%
Sales - 3 Yr. Growth Rate %
EPS Growth Rate %
EPS - 3 Yr. Growth Rate %
Capital Spending Gr. Rate -13%
Cap. Spend. - 3 Yr. Gr. Rate -4.8%
Financial Strength
Quick Ratio 102
Current Ratio 0
LT Debt to Equity 40%
Total Debt to Equity 40.5%
Interest Coverage -3
Management Effectiveness
Return On Assets -1.9%
Ret/ On Assets - 3 Yr. Avg. 4.6%
Return On Total Capital -3.1%
Ret/ On T. Cap. - 3 Yr. Avg. 4.6%
Return On Equity -4.9%
Return On Equity - 3 Yr. Avg. 10.8%
Asset Turnover 0.4
Profitability Ratios
Gross Margin 14.6%
Gross Margin - 3 Yr. Avg. 24.3%
EBITDA Margin 2.1%
EBITDA Margin - 3 Yr. Avg. 13.2%
Operating Margin -9.5%
Oper. Margin - 3 Yr. Avg. 4.9%
Pre-Tax Margin -13.9%
Pre-Tax Margin - 3 Yr. Avg. 1.4%
Net Profit Margin -7.3%
Net Profit Margin - 3 Yr. Avg. 2.8%
Effective Tax Rate 47.4%
Eff/ Tax Rate - 3 Yr. Avg. 23.6%
Payout Ratio -36.6%

SLCA stock valuation input parameters

Revenue. Company's revenue (or sales) is always the starting point of any cash flow forecast. In the SLCA stock intrinsic value calculation we used $560 million for the last fiscal year's total revenue generated by U.S. Silica Holdings. The default revenue input number comes from 2016 income statement of U.S. Silica 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 SLCA 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 SLCA is calculated based on our internal credit rating of U.S. Silica 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 U.S. Silica 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 SLCA stock the variable cost ratio is equal to 19.1%.

Fixed operating expenses is just that - expenses that are not dependant on the volume of production. They are set to $505 million in the base year in the intrinsic value calculation for SLCA 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 U.S. Silica Holdings.

Corporate tax rate of 27% is the nominal tax rate for U.S. Silica 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 SLCA 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 SLCA are equal to 134.6%.

Life of production assets of 13.4 years is the average useful life of capital assets used in U.S. Silica 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 SLCA is equal to 14.1%. 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 - $1273 million for U.S. Silica 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 79.732 million for U.S. Silica 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 U.S. Silica Holdings at the current share price and the inputted number of shares is $3.0 billion.


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Stock chart of SLCA Financial statements of SLCA Annual reports of SLCA
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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