Intrinsic value of Tecogen - TGEN

Previous Close

$3.27

  Intrinsic Value

$47.08

stock screener

  Rating & Target

str. buy

+999%

  Value-price divergence*

0%

Previous close

$3.27

 
Intrinsic value

$47.08

 
Up/down potential

+999%

 
Rating

str. buy

 
Value-price divergence*

0%

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

We calculate the intrinsic value of TGEN 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 0.1

 

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, %
  14.29
  40.00
  36.50
  33.35
  30.52
  27.96
  25.67
  23.60
  21.74
  20.07
  18.56
  17.20
  15.98
  14.89
  13.90
  13.01
  12.21
  11.49
  10.84
  10.25
  9.73
  9.26
  8.83
  8.45
  8.10
  7.79
  7.51
  7.26
  7.04
  6.83
  6.65
Revenue, $m
  24
  34
  46
  61
  80
  102
  128
  159
  193
  232
  275
  322
  374
  429
  489
  553
  620
  691
  766
  845
  927
  1,013
  1,102
  1,195
  1,292
  1,393
  1,498
  1,606
  1,719
  1,837
  1,959
Variable operating expenses, $m
 
  11
  15
  20
  27
  34
  43
  53
  64
  77
  92
  107
  124
  143
  163
  184
  207
  230
  255
  281
  309
  337
  367
  398
  430
  464
  499
  535
  573
  612
  652
Fixed operating expenses, $m
 
  17
  18
  18
  19
  19
  20
  20
  21
  21
  22
  22
  23
  23
  24
  25
  25
  26
  27
  27
  28
  29
  29
  30
  31
  32
  32
  33
  34
  35
  36
Total operating expenses, $m
  25
  28
  33
  38
  46
  53
  63
  73
  85
  98
  114
  129
  147
  166
  187
  209
  232
  256
  282
  308
  337
  366
  396
  428
  461
  496
  531
  568
  607
  647
  688
Operating income, $m
  -1
  5
  13
  22
  34
  49
  66
  86
  108
  133
  162
  193
  226
  263
  302
  344
  388
  435
  485
  536
  590
  647
  706
  767
  831
  898
  967
  1,038
  1,113
  1,190
  1,271
EBITDA, $m
  -1
  5
  13
  23
  35
  50
  67
  87
  110
  135
  164
  195
  230
  267
  306
  349
  394
  441
  491
  543
  598
  655
  715
  777
  842
  909
  979
  1,052
  1,127
  1,206
  1,287
Interest expense (income), $m
  0
  0
  0
  0
  1
  1
  1
  1
  2
  2
  3
  3
  4
  5
  5
  6
  7
  8
  9
  10
  11
  12
  13
  14
  15
  17
  18
  19
  21
  22
  24
Earnings before tax, $m
  -1
  5
  12
  22
  34
  48
  65
  84
  106
  131
  159
  189
  222
  258
  297
  338
  381
  427
  476
  526
  580
  635
  693
  753
  816
  881
  948
  1,019
  1,092
  1,168
  1,247
Tax expense, $m
  0
  1
  3
  6
  9
  13
  17
  23
  29
  35
  43
  51
  60
  70
  80
  91
  103
  115
  128
  142
  156
  171
  187
  203
  220
  238
  256
  275
  295
  315
  337
Net income, $m
  -1
  4
  9
  16
  25
  35
  47
  61
  78
  96
  116
  138
  162
  189
  217
  247
  278
  312
  347
  384
  423
  464
  506
  550
  595
  643
  692
  744
  797
  853
  910

BALANCE SHEET

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Cash and short-term investments, $m
  4
  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
  24
  28
  38
  51
  67
  85
  107
  132
  161
  193
  229
  269
  311
  358
  408
  461
  517
  576
  639
  704
  773
  844
  919
  996
  1,077
  1,161
  1,248
  1,339
  1,433
  1,531
  1,632
Adjusted assets (=assets-cash), $m
  20
  28
  38
  51
  67
  85
  107
  132
  161
  193
  229
  269
  311
  358
  408
  461
  517
  576
  639
  704
  773
  844
  919
  996
  1,077
  1,161
  1,248
  1,339
  1,433
  1,531
  1,632
Revenue / Adjusted assets
  1.200
  1.214
  1.211
  1.196
  1.194
  1.200
  1.196
  1.205
  1.199
  1.202
  1.201
  1.197
  1.203
  1.198
  1.199
  1.200
  1.199
  1.200
  1.199
  1.200
  1.199
  1.200
  1.199
  1.200
  1.200
  1.200
  1.200
  1.199
  1.200
  1.200
  1.200
Average production assets, $m
  2
  3
  4
  5
  7
  8
  11
  13
  16
  19
  23
  27
  31
  36
  41
  46
  51
  57
  64
  70
  77
  84
  91
  99
  107
  116
  124
  133
  143
  152
  163
Working capital, $m
  14
  14
  19
  26
  33
  43
  54
  66
  81
  97
  115
  134
  156
  179
  204
  230
  259
  288
  320
  352
  387
  422
  460
  498
  539
  581
  624
  670
  717
  766
  817
Total debt, $m
  3
  7
  11
  17
  24
  32
  42
  53
  66
  81
  97
  115
  134
  155
  177
  201
  227
  253
  281
  311
  342
  374
  407
  442
  479
  516
  556
  596
  639
  683
  729
Total liabilities, $m
  9
  13
  17
  23
  30
  38
  48
  59
  72
  87
  103
  121
  140
  161
  183
  207
  233
  259
  287
  317
  348
  380
  413
  448
  485
  522
  562
  602
  645
  689
  735
Total equity, $m
  15
  15
  21
  28
  37
  47
  59
  73
  89
  106
  126
  148
  171
  197
  224
  253
  284
  317
  351
  387
  425
  464
  505
  548
  592
  638
  686
  736
  788
  842
  898
Total liabilities and equity, $m
  24
  28
  38
  51
  67
  85
  107
  132
  161
  193
  229
  269
  311
  358
  407
  460
  517
  576
  638
  704
  773
  844
  918
  996
  1,077
  1,160
  1,248
  1,338
  1,433
  1,531
  1,633
Debt-to-equity ratio
  0.200
  0.430
  0.530
  0.600
  0.650
  0.690
  0.720
  0.740
  0.750
  0.760
  0.770
  0.780
  0.780
  0.790
  0.790
  0.790
  0.800
  0.800
  0.800
  0.800
  0.800
  0.810
  0.810
  0.810
  0.810
  0.810
  0.810
  0.810
  0.810
  0.810
  0.810
Adjusted equity ratio
  0.550
  0.550
  0.550
  0.550
  0.550
  0.550
  0.550
  0.550
  0.550
  0.550
  0.550
  0.550
  0.550
  0.550
  0.550
  0.550
  0.550
  0.550
  0.550
  0.550
  0.550
  0.550
  0.550
  0.550
  0.550
  0.550
  0.550
  0.550
  0.550
  0.550
  0.550

CASH FLOW

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Net income, $m
  -1
  4
  9
  16
  25
  35
  47
  61
  78
  96
  116
  138
  162
  189
  217
  247
  278
  312
  347
  384
  423
  464
  506
  550
  595
  643
  692
  744
  797
  853
  910
Depreciation, amort., depletion, $m
  0
  0
  0
  1
  1
  1
  1
  1
  2
  2
  2
  3
  3
  4
  4
  5
  5
  6
  6
  7
  8
  8
  9
  10
  11
  12
  12
  13
  14
  15
  16
Funds from operations, $m
  -5
  4
  10
  17
  25
  36
  48
  63
  79
  98
  118
  141
  165
  192
  221
  251
  284
  318
  354
  391
  431
  472
  515
  560
  606
  655
  705
  757
  811
  868
  927
Change in working capital, $m
  -2
  4
  5
  6
  8
  9
  11
  13
  14
  16
  18
  20
  21
  23
  25
  27
  28
  30
  31
  33
  34
  36
  37
  39
  40
  42
  44
  45
  47
  49
  51
Cash from operations, $m
  -3
  0
  4
  10
  18
  27
  37
  50
  65
  81
  100
  121
  144
  169
  196
  225
  255
  288
  322
  359
  397
  436
  478
  521
  566
  613
  661
  712
  764
  819
  876
Maintenance CAPEX, $m
  0
  0
  0
  0
  -1
  -1
  -1
  -1
  -1
  -2
  -2
  -2
  -3
  -3
  -4
  -4
  -5
  -5
  -6
  -6
  -7
  -8
  -8
  -9
  -10
  -11
  -12
  -12
  -13
  -14
  -15
New CAPEX, $m
  0
  -1
  -1
  -1
  -2
  -2
  -2
  -3
  -3
  -3
  -4
  -4
  -4
  -5
  -5
  -5
  -6
  -6
  -6
  -7
  -7
  -7
  -7
  -8
  -8
  -8
  -9
  -9
  -9
  -10
  -10
Cash from investing activities, $m
  -2
  -1
  -1
  -1
  -3
  -3
  -3
  -4
  -4
  -5
  -6
  -6
  -7
  -8
  -9
  -9
  -11
  -11
  -12
  -13
  -14
  -15
  -15
  -17
  -18
  -19
  -21
  -21
  -22
  -24
  -25
Free cash flow, $m
  -5
  -1
  3
  9
  16
  24
  34
  47
  61
  77
  95
  115
  137
  161
  187
  215
  245
  277
  310
  346
  383
  421
  462
  504
  548
  593
  641
  690
  742
  795
  850
Issuance/(repayment) of debt, $m
  0
  4
  5
  6
  7
  8
  10
  11
  13
  15
  16
  18
  19
  21
  22
  24
  25
  27
  28
  29
  31
  32
  34
  35
  36
  38
  39
  41
  42
  44
  46
Issuance/(repurchase) of shares, $m
  3
  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
Cash from financing (excl. dividends), $m  
  3
  5
  5
  6
  7
  8
  10
  11
  13
  15
  16
  18
  19
  21
  22
  24
  25
  27
  28
  29
  31
  32
  34
  35
  36
  38
  39
  41
  42
  44
  46
Total cash flow (excl. dividends), $m
  -2
  3
  8
  14
  23
  32
  44
  58
  74
  91
  111
  133
  156
  182
  210
  239
  271
  304
  339
  375
  414
  454
  495
  539
  584
  631
  680
  731
  784
  839
  896
Retained Cash Flow (-), $m
  -2
  -4
  -6
  -7
  -9
  -10
  -12
  -14
  -16
  -18
  -20
  -22
  -24
  -25
  -27
  -29
  -31
  -33
  -34
  -36
  -38
  -39
  -41
  -43
  -44
  -46
  -48
  -50
  -52
  -54
  -56
Prev. year cash balance distribution, $m
 
  4
  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
 
  3
  2
  7
  14
  22
  32
  44
  58
  73
  91
  111
  133
  157
  182
  210
  240
  271
  304
  339
  376
  414
  454
  496
  540
  585
  632
  681
  732
  785
  840
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
 
  3
  2
  6
  12
  17
  23
  30
  36
  42
  48
  53
  57
  60
  61
  62
  61
  59
  56
  52
  48
  43
  38
  33
  27
  23
  18
  15
  11
  9
  6
Current shareholders' claim on cash, %
  100
  98.4
  98.4
  98.4
  98.4
  98.4
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Tecogen Inc. designs, manufactures, and sells industrial and commercial cogeneration systems that produce electricity, hot water, and air conditioning primarily in the United States, the United Kingdom, Mexico, and Ireland. It offers InVerde 100, InVerde e+, CM-75, and CM-60 cogeneration units that supply electricity and hot water; chillers that provide air-conditioning and hot water under the TECOCHILL brand name; and water heaters under the Ilios brand. The company also provides long-term maintenance contracts, parts sales, and turnkey installation services through a network of nine field service centers in California, the Midwest, and the Northeast. It serves hospitals and nursing homes, colleges and universities, health clubs and spas, hotels and motels, office and retail buildings, food and beverage processors, multi-unit residential buildings, laundries, ice rinks, swimming pools, factories, municipal buildings, and military installations. The company was incorporated in 2000 and is headquartered in Waltham, Massachusetts.

FINANCIAL RATIOS  of  Tecogen (TGEN)

Valuation Ratios
P/E Ratio -65.3
Price to Sales 2.7
Price to Book 4.4
Price to Tangible Book
Price to Cash Flow -21.8
Price to Free Cash Flow -21.8
Growth Rates
Sales Growth Rate 14.3%
Sales - 3 Yr. Growth Rate %
EPS Growth Rate %
EPS - 3 Yr. Growth Rate %
Capital Spending Gr. Rate NaN%
Cap. Spend. - 3 Yr. Gr. Rate -100%
Financial Strength
Quick Ratio NaN
Current Ratio 0
LT Debt to Equity 20%
Total Debt to Equity 20%
Interest Coverage 0
Management Effectiveness
Return On Assets -4.4%
Ret/ On Assets - 3 Yr. Avg. -15.5%
Return On Total Capital -5.9%
Ret/ On T. Cap. - 3 Yr. Avg. -22.1%
Return On Equity -7.1%
Return On Equity - 3 Yr. Avg. -33.4%
Asset Turnover 1.1
Profitability Ratios
Gross Margin 37.5%
Gross Margin - 3 Yr. Avg. 35.7%
EBITDA Margin -4.2%
EBITDA Margin - 3 Yr. Avg. -13.2%
Operating Margin -4.2%
Oper. Margin - 3 Yr. Avg. -13.2%
Pre-Tax Margin -4.2%
Pre-Tax Margin - 3 Yr. Avg. -13.2%
Net Profit Margin -4.2%
Net Profit Margin - 3 Yr. Avg. -13.2%
Effective Tax Rate 0%
Eff/ Tax Rate - 3 Yr. Avg. 0%
Payout Ratio 0%

TGEN stock valuation input parameters

Revenue. Company's revenue (or sales) is always the starting point of any cash flow forecast. In the TGEN stock intrinsic value calculation we used $24 million for the last fiscal year's total revenue generated by Tecogen. The default revenue input number comes from 2016 income statement of Tecogen. 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 TGEN stock valuation model: a) initial revenue growth rate of 40% 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 TGEN is calculated based on our internal credit rating of Tecogen, 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 Tecogen.
    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 TGEN stock the variable cost ratio is equal to 33.3%.

Fixed operating expenses is just that - expenses that are not dependant on the volume of production. They are set to $17 million in the base year in the intrinsic value calculation for TGEN 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 Tecogen.

Corporate tax rate of 27% is the nominal tax rate for Tecogen. 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 TGEN 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 TGEN are equal to 8.3%.

Life of production assets of 10 years is the average useful life of capital assets used in Tecogen 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 TGEN is equal to 41.7%. 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 - $15 million for Tecogen - 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 21.374 million for Tecogen 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 Tecogen at the current share price and the inputted number of shares is $0.1 billion.

RELATED COMPANIES Price Int.Val. Rating
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COMPANY NEWS

▶ Tecogen Announces Second Quarter 2017 Results   [Aug-14-17 08:45AM  Marketwired]
▶ Chiller Sale to Repeat Customer in Boise, Idaho   [Aug-10-17 08:00AM  Marketwired]
▶ Maine Fitness Club Makes Ilios its Choice for Hot Water   [Aug-01-17 08:00AM  Marketwired]
▶ 5 of the Best Stocks Under $10 for 2017   [Jul-05-17 12:54PM  Zacks]
▶ 5 of the Best Stocks Under $10 for 2017   [Jun-01-17 02:38PM  Zacks]
▶ Tecogen Appoints New Executives   [May-25-17 09:00AM  Marketwired]
▶ Tecogen and American DG Complete Merger   [May-18-17 05:02PM  Marketwired]
▶ Tecogen And American DG Complete Merger   [04:55PM  PR Newswire]
▶ Tecogen Announces Merger S-4 Effective by SEC   [Apr-13-17 09:25AM  PR Newswire]
▶ Tecogen Presenting at SAE World Congress   [Apr-04-17 09:52AM  PR Newswire]
▶ MGM Selects Tecogen Clean Energy   [Feb-28-17 09:00AM  PR Newswire]
▶ Fairview at Forest Hills to Start Saving with Tecogen   [Nov-16-16 09:00AM  PR Newswire]
▶ /C O R R E C T I O N -- Tecogen Inc./   [Nov-10-16 09:14AM  PR Newswire]
▶ Tecogen to Acquire American DG Energy   [08:00AM  PR Newswire]
▶ Tecogen Sells Chillers to Gas Natural Fenosa   [Oct-06-16 09:00AM  PR Newswire]
▶ Tecogen Wins $1.6M Order for 300kW InVerde e+ System   [Sep-20-16 09:00AM  PR Newswire]
▶ Tecogen Announces TTcogen Breaks into New Jersey Market   [Aug-16-16 09:00AM  PR Newswire]
▶ Tecogen Announces Second Quarter 2016 Results   [Aug-10-16 09:00AM  PR Newswire]
▶ Tecogen Announces Quarter End Backlog of $14 Million   [Jul-12-16 09:00AM  PR Newswire]
Stock chart of TGEN Financial statements of TGEN
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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