Intrinsic value of SunCoke Energy - SXC

Previous Close

$12.47

  Intrinsic Value

$3.94

stock screener

  Rating & Target

str. sell

-68%

Previous close

$12.47

 
Intrinsic value

$3.94

 
Up/down potential

-68%

 
Rating

str. sell

We calculate the intrinsic value of SXC 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, %
  -10.27
  15.30
  14.27
  13.34
  12.51
  11.76
  11.08
  10.47
  9.93
  9.43
  8.99
  8.59
  8.23
  7.91
  7.62
  7.36
  7.12
  6.91
  6.72
  6.55
  6.39
  6.25
  6.13
  6.01
  5.91
  5.82
  5.74
  5.67
  5.60
  5.54
  5.49
Revenue, $m
  1,223
  1,410
  1,611
  1,826
  2,055
  2,296
  2,551
  2,818
  3,098
  3,390
  3,695
  4,012
  4,343
  4,686
  5,043
  5,414
  5,799
  6,200
  6,617
  7,050
  7,500
  7,969
  8,458
  8,966
  9,496
  10,049
  10,626
  11,228
  11,857
  12,513
  13,200
Variable operating expenses, $m
 
  1,326
  1,514
  1,715
  1,928
  2,154
  2,392
  2,642
  2,903
  3,176
  3,461
  3,750
  4,059
  4,380
  4,714
  5,060
  5,421
  5,795
  6,185
  6,589
  7,011
  7,449
  7,905
  8,381
  8,876
  9,393
  9,932
  10,495
  11,082
  11,696
  12,338
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
  1,102
  1,326
  1,514
  1,715
  1,928
  2,154
  2,392
  2,642
  2,903
  3,176
  3,461
  3,750
  4,059
  4,380
  4,714
  5,060
  5,421
  5,795
  6,185
  6,589
  7,011
  7,449
  7,905
  8,381
  8,876
  9,393
  9,932
  10,495
  11,082
  11,696
  12,338
Operating income, $m
  122
  84
  98
  112
  126
  142
  159
  176
  195
  214
  234
  262
  284
  306
  329
  354
  379
  405
  432
  460
  490
  520
  552
  585
  620
  656
  694
  733
  774
  817
  862
EBITDA, $m
  236
  218
  249
  282
  318
  355
  394
  436
  479
  524
  571
  620
  671
  724
  779
  837
  896
  958
  1,023
  1,090
  1,159
  1,232
  1,307
  1,386
  1,468
  1,553
  1,642
  1,735
  1,832
  1,934
  2,040
Interest expense (income), $m
  58
  53
  70
  88
  108
  129
  151
  175
  199
  225
  252
  280
  309
  339
  371
  404
  438
  474
  510
  549
  589
  630
  673
  718
  765
  814
  865
  918
  973
  1,031
  1,092
Earnings before tax, $m
  68
  31
  28
  23
  19
  13
  8
  2
  -5
  -11
  -18
  -18
  -26
  -34
  -42
  -50
  -59
  -69
  -78
  -88
  -99
  -110
  -121
  -133
  -145
  -158
  -171
  -185
  -199
  -214
  -230
Tax expense, $m
  8
  8
  8
  6
  5
  4
  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
Net income, $m
  14
  23
  20
  17
  14
  10
  6
  1
  -5
  -11
  -18
  -18
  -26
  -34
  -42
  -50
  -59
  -69
  -78
  -88
  -99
  -110
  -121
  -133
  -145
  -158
  -171
  -185
  -199
  -214
  -230

BALANCE SHEET

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Cash and short-term investments, $m
  134
  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
  2,121
  2,289
  2,616
  2,965
  3,336
  3,728
  4,141
  4,575
  5,029
  5,503
  5,998
  6,513
  7,050
  7,607
  8,187
  8,789
  9,415
  10,065
  10,741
  11,444
  12,176
  12,937
  13,730
  14,556
  15,416
  16,314
  17,250
  18,227
  19,248
  20,314
  21,428
Adjusted assets (=assets-cash), $m
  1,987
  2,289
  2,616
  2,965
  3,336
  3,728
  4,141
  4,575
  5,029
  5,503
  5,998
  6,513
  7,050
  7,607
  8,187
  8,789
  9,415
  10,065
  10,741
  11,444
  12,176
  12,937
  13,730
  14,556
  15,416
  16,314
  17,250
  18,227
  19,248
  20,314
  21,428
Revenue / Adjusted assets
  0.616
  0.616
  0.616
  0.616
  0.616
  0.616
  0.616
  0.616
  0.616
  0.616
  0.616
  0.616
  0.616
  0.616
  0.616
  0.616
  0.616
  0.616
  0.616
  0.616
  0.616
  0.616
  0.616
  0.616
  0.616
  0.616
  0.616
  0.616
  0.616
  0.616
  0.616
Average production assets, $m
  1,747
  2,014
  2,301
  2,608
  2,934
  3,279
  3,643
  4,024
  4,424
  4,841
  5,276
  5,729
  6,201
  6,692
  7,201
  7,731
  8,282
  8,854
  9,449
  10,067
  10,710
  11,380
  12,077
  12,804
  13,561
  14,350
  15,174
  16,034
  16,931
  17,869
  18,849
Working capital, $m
  144
  17
  19
  22
  25
  28
  31
  34
  37
  41
  44
  48
  52
  56
  61
  65
  70
  74
  79
  85
  90
  96
  101
  108
  114
  121
  128
  135
  142
  150
  158
Total debt, $m
  854
  1,104
  1,398
  1,712
  2,046
  2,399
  2,771
  3,161
  3,570
  3,997
  4,442
  4,906
  5,389
  5,890
  6,412
  6,954
  7,517
  8,103
  8,711
  9,344
  10,002
  10,687
  11,401
  12,144
  12,919
  13,726
  14,569
  15,449
  16,367
  17,327
  18,329
Total liabilities, $m
  1,810
  2,060
  2,354
  2,668
  3,002
  3,355
  3,727
  4,117
  4,526
  4,953
  5,398
  5,862
  6,345
  6,846
  7,368
  7,910
  8,473
  9,059
  9,667
  10,300
  10,958
  11,643
  12,357
  13,100
  13,875
  14,682
  15,525
  16,405
  17,323
  18,283
  19,285
Total equity, $m
  311
  229
  262
  296
  334
  373
  414
  457
  503
  550
  600
  651
  705
  761
  819
  879
  941
  1,007
  1,074
  1,144
  1,218
  1,294
  1,373
  1,456
  1,542
  1,631
  1,725
  1,823
  1,925
  2,031
  2,143
Total liabilities and equity, $m
  2,121
  2,289
  2,616
  2,964
  3,336
  3,728
  4,141
  4,574
  5,029
  5,503
  5,998
  6,513
  7,050
  7,607
  8,187
  8,789
  9,414
  10,066
  10,741
  11,444
  12,176
  12,937
  13,730
  14,556
  15,417
  16,313
  17,250
  18,228
  19,248
  20,314
  21,428
Debt-to-equity ratio
  2.746
  4.820
  5.350
  5.780
  6.130
  6.440
  6.690
  6.910
  7.100
  7.260
  7.410
  7.530
  7.640
  7.740
  7.830
  7.910
  7.980
  8.050
  8.110
  8.160
  8.210
  8.260
  8.300
  8.340
  8.380
  8.410
  8.450
  8.480
  8.500
  8.530
  8.550
Adjusted equity ratio
  0.089
  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
  14
  23
  20
  17
  14
  10
  6
  1
  -5
  -11
  -18
  -18
  -26
  -34
  -42
  -50
  -59
  -69
  -78
  -88
  -99
  -110
  -121
  -133
  -145
  -158
  -171
  -185
  -199
  -214
  -230
Depreciation, amort., depletion, $m
  114
  134
  152
  171
  191
  213
  235
  259
  284
  310
  337
  358
  388
  418
  450
  483
  518
  553
  591
  629
  669
  711
  755
  800
  848
  897
  948
  1,002
  1,058
  1,117
  1,178
Funds from operations, $m
  268
  156
  172
  188
  205
  222
  241
  260
  280
  299
  319
  340
  362
  385
  408
  433
  458
  485
  512
  541
  570
  601
  634
  667
  703
  739
  777
  817
  859
  903
  948
Change in working capital, $m
  49
  2
  2
  3
  3
  3
  3
  3
  3
  4
  4
  4
  4
  4
  4
  4
  5
  5
  5
  5
  5
  6
  6
  6
  6
  7
  7
  7
  8
  8
  8
Cash from operations, $m
  219
  154
  169
  185
  202
  219
  238
  257
  276
  295
  316
  336
  358
  381
  404
  428
  454
  480
  507
  536
  565
  596
  628
  661
  696
  733
  771
  810
  852
  895
  940
Maintenance CAPEX, $m
  0
  -109
  -126
  -144
  -163
  -183
  -205
  -228
  -252
  -276
  -303
  -330
  -358
  -388
  -418
  -450
  -483
  -518
  -553
  -591
  -629
  -669
  -711
  -755
  -800
  -848
  -897
  -948
  -1,002
  -1,058
  -1,117
New CAPEX, $m
  -64
  -267
  -287
  -307
  -326
  -345
  -363
  -382
  -399
  -417
  -435
  -453
  -472
  -490
  -510
  -530
  -551
  -572
  -595
  -619
  -643
  -670
  -697
  -726
  -757
  -789
  -824
  -860
  -898
  -938
  -980
Cash from investing activities, $m
  -36
  -376
  -413
  -451
  -489
  -528
  -568
  -610
  -651
  -693
  -738
  -783
  -830
  -878
  -928
  -980
  -1,034
  -1,090
  -1,148
  -1,210
  -1,272
  -1,339
  -1,408
  -1,481
  -1,557
  -1,637
  -1,721
  -1,808
  -1,900
  -1,996
  -2,097
Free cash flow, $m
  183
  -222
  -244
  -266
  -287
  -309
  -330
  -352
  -375
  -398
  -422
  -447
  -472
  -497
  -524
  -552
  -580
  -610
  -641
  -674
  -708
  -743
  -781
  -820
  -861
  -904
  -950
  -998
  -1,048
  -1,101
  -1,157
Issuance/(repayment) of debt, $m
  -121
  255
  294
  314
  334
  353
  372
  390
  409
  427
  445
  464
  483
  502
  522
  542
  563
  585
  609
  633
  658
  685
  713
  743
  775
  808
  843
  880
  918
  960
  1,003
Issuance/(repurchase) of shares, $m
  -1
  24
  12
  18
  24
  29
  36
  42
  50
  59
  68
  69
  79
  89
  100
  111
  122
  134
  146
  159
  172
  186
  200
  215
  231
  247
  265
  282
  301
  321
  341
Cash from financing (excl. dividends), $m  
  -172
  279
  306
  332
  358
  382
  408
  432
  459
  486
  513
  533
  562
  591
  622
  653
  685
  719
  755
  792
  830
  871
  913
  958
  1,006
  1,055
  1,108
  1,162
  1,219
  1,281
  1,344
Total cash flow (excl. dividends), $m
  11
  58
  63
  66
  70
  74
  77
  81
  84
  87
  91
  87
  90
  94
  97
  101
  105
  109
  114
  118
  123
  128
  133
  139
  145
  151
  157
  164
  171
  179
  187
Retained Cash Flow (-), $m
  -21
  -47
  -33
  -35
  -37
  -39
  -41
  -43
  -50
  -59
  -68
  -69
  -79
  -89
  -100
  -111
  -122
  -134
  -146
  -159
  -172
  -186
  -200
  -215
  -231
  -247
  -265
  -282
  -301
  -321
  -341
Prev. year cash balance distribution, $m
 
  129
  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
 
  140
  30
  31
  33
  34
  36
  37
  34
  29
  23
  17
  11
  4
  -2
  -10
  -17
  -25
  -32
  -41
  -49
  -58
  -67
  -77
  -87
  -97
  -107
  -118
  -130
  -142
  -154
Discount rate, %
 
  8.70
  9.14
  9.59
  10.07
  10.57
  11.10
  11.66
  12.24
  12.85
  13.50
  14.17
  14.88
  15.62
  16.41
  17.23
  18.09
  18.99
  19.94
  20.94
  21.98
  23.08
  24.24
  25.45
  26.72
  28.06
  29.46
  30.93
  32.48
  34.11
  35.81
PV of cash for distribution, $m
 
  129
  25
  24
  22
  21
  19
  17
  13
  10
  7
  4
  2
  1
  0
  -1
  -1
  -1
  -1
  -1
  -1
  -1
  -1
  0
  0
  0
  0
  0
  0
  0
  0
Current shareholders' claim on cash, %
  100
  95.1
  93.2
  90.8
  88.1
  85.3
  82.2
  79.1
  76.0
  72.7
  69.4
  66.5
  63.5
  60.6
  57.7
  54.8
  52.1
  49.4
  46.8
  44.2
  41.8
  39.5
  37.3
  35.2
  33.2
  31.2
  29.4
  27.7
  26.0
  24.5
  23.0

SunCoke Energy, Inc. is a producer of coke in the Americas. The Company's segments include Domestic Coke, Brazil Coke, Coal Logistics, and Corporate and Other. The Domestic Coke segment consists of its Jewell Coke Company, L.P. (Jewell), Indiana Harbor Coke Company (Indiana Harbor), Haverhill Coke Company LLC (Haverhill), Gateway Energy and Coke Company, LLC (Granite City) and Middletown Coke Company, LLC (Middletown) cokemaking and heat recovery operations. The Brazil Coke segment consists of its operations in Vitoria, Brazil, where the Company operate a cokemaking facility, ArcelorMittal Brasil S.A. The Coal Logistics segment consists of its Convent Marine Terminal (CMT), Kanawha River Terminals, LLC (KRT), SunCoke Lake Terminal, LLC (Lake Terminal) and Dismal River Terminal, LLC (DRT) coal handling and/or mixing service operations. It designs, develops, builds, owns and operates five cokemaking facilities in the United States, as of December 31, 2016.

FINANCIAL RATIOS  of  SunCoke Energy (SXC)

Valuation Ratios
P/E Ratio 57.2
Price to Sales 0.7
Price to Book 2.6
Price to Tangible Book
Price to Cash Flow 3.7
Price to Free Cash Flow 5.2
Growth Rates
Sales Growth Rate -10.3%
Sales - 3 Yr. Growth Rate %
EPS Growth Rate %
EPS - 3 Yr. Growth Rate %
Capital Spending Gr. Rate -15.8%
Cap. Spend. - 3 Yr. Gr. Rate -15.2%
Financial Strength
Quick Ratio 27
Current Ratio 0
LT Debt to Equity 273%
Total Debt to Equity 274.6%
Interest Coverage 2
Management Effectiveness
Return On Assets 3%
Ret/ On Assets - 3 Yr. Avg. 0.3%
Return On Total Capital 1.1%
Ret/ On T. Cap. - 3 Yr. Avg. -3.9%
Return On Equity 4.7%
Return On Equity - 3 Yr. Avg. -9%
Asset Turnover 0.6
Profitability Ratios
Gross Margin 25.9%
Gross Margin - 3 Yr. Avg. 21.5%
EBITDA Margin 19.6%
EBITDA Margin - 3 Yr. Avg. 11.8%
Operating Margin 9.9%
Oper. Margin - 3 Yr. Avg. 3.9%
Pre-Tax Margin 5.6%
Pre-Tax Margin - 3 Yr. Avg. -0.4%
Net Profit Margin 1.1%
Net Profit Margin - 3 Yr. Avg. -2.9%
Effective Tax Rate 11.8%
Eff/ Tax Rate - 3 Yr. Avg. 6.5%
Payout Ratio 0%

SXC stock valuation input parameters

Revenue. Company's revenue (or sales) is always the starting point of any cash flow forecast. In the SXC stock intrinsic value calculation we used $1223 million for the last fiscal year's total revenue generated by SunCoke Energy. The default revenue input number comes from 2016 income statement of SunCoke Energy. 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 SXC stock valuation model: a) initial revenue growth rate of 15.3% 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 8.7%, whose default value for SXC is calculated based on our internal credit rating of SunCoke Energy, 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 SunCoke Energy.
    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 SXC stock the variable cost ratio is equal to 94.1%.

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 SXC 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 6.3% for SunCoke Energy.

Corporate tax rate of 27% is the nominal tax rate for SunCoke Energy. 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 SXC 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 SXC are equal to 142.8%.

Life of production assets of 16 years is the average useful life of capital assets used in SunCoke Energy 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 SXC is equal to 1.2%. 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 - $311 million for SunCoke Energy - 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 65 million for SunCoke Energy 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 SunCoke Energy at the current share price and the inputted number of shares is $0.8 billion.

RELATED COMPANIES Price Int.Val. Rating
SXCP SunCoke Energy 19.65 3.58  str.sell
MT ArcelorMittal 36.65 6.07  str.sell
CLD Cloud Peak Ene 5.15 3.16  sell
CNX CNX Resources 14.64 4.04  str.sell

COMPANY NEWS

▶ Is It The Right Time To Buy SunCoke Energy Partners LP (SXCP)?   [Dec-02-17 12:00PM  Simply Wall St.]
▶ SunCoke posts 3Q profit   [Oct-26-17 07:51AM  Associated Press]
▶ The Biggest MLP Losses Last Week   [Sep-18-17 01:00PM  Market Realist]
▶ SunCoke Energy Doesn't Look Very Sunny   [Aug-07-17 02:24PM  TheStreet.com]
▶ SunCoke reports 2Q loss   [Jul-27-17 03:51PM  Associated Press]
▶ SunCoke Energy Partners Provides Opportunity for Investors   [May-09-17 03:59PM  GuruFocus.com]
Financial statements of SXC
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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