Intrinsic value of TOP Ships - TOPS

Previous Close

$0.32

  Intrinsic Value

$44.54

stock screener

  Rating & Target

str. buy

+999%

Previous close

$0.32

 
Intrinsic value

$44.54

 
Up/down potential

+999%

 
Rating

str. buy

We calculate the intrinsic value of TOPS 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 0.0

 

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, %
  115.38
  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
  28
  45
  69
  104
  150
  212
  291
  391
  513
  661
  834
  1,036
  1,267
  1,527
  1,817
  2,136
  2,485
  2,863
  3,268
  3,702
  4,162
  4,648
  5,160
  5,698
  6,260
  6,848
  7,461
  8,099
  8,763
  9,453
  10,171
Variable operating expenses, $m
 
  14
  22
  33
  48
  68
  94
  126
  165
  212
  268
  333
  407
  490
  583
  686
  798
  919
  1,049
  1,188
  1,336
  1,492
  1,656
  1,829
  2,010
  2,198
  2,395
  2,600
  2,813
  3,034
  3,265
Fixed operating expenses, $m
 
  16
  17
  17
  18
  18
  19
  19
  19
  20
  20
  21
  22
  22
  23
  23
  24
  24
  25
  26
  26
  27
  28
  28
  29
  30
  30
  31
  32
  33
  34
Total operating expenses, $m
  24
  30
  39
  50
  66
  86
  113
  145
  184
  232
  288
  354
  429
  512
  606
  709
  822
  943
  1,074
  1,214
  1,362
  1,519
  1,684
  1,857
  2,039
  2,228
  2,425
  2,631
  2,845
  3,067
  3,299
Operating income, $m
  5
  14
  30
  53
  84
  126
  179
  246
  329
  429
  546
  683
  839
  1,015
  1,211
  1,427
  1,664
  1,919
  2,194
  2,488
  2,800
  3,129
  3,476
  3,840
  4,222
  4,620
  5,035
  5,468
  5,918
  6,386
  6,872
EBITDA, $m
  9
  14
  30
  53
  84
  126
  179
  246
  329
  429
  546
  683
  839
  1,015
  1,211
  1,427
  1,664
  1,919
  2,194
  2,488
  2,800
  3,129
  3,476
  3,840
  4,222
  4,620
  5,035
  5,468
  5,918
  6,386
  6,872
Interest expense (income), $m
  2
  3
  5
  8
  13
  19
  26
  36
  49
  65
  83
  105
  131
  160
  193
  230
  270
  314
  362
  414
  468
  527
  588
  653
  721
  793
  867
  945
  1,025
  1,110
  1,197
Earnings before tax, $m
  1
  11
  25
  45
  72
  107
  153
  210
  280
  364
  463
  577
  708
  855
  1,018
  1,198
  1,393
  1,605
  1,832
  2,074
  2,331
  2,602
  2,888
  3,187
  3,500
  3,827
  4,168
  4,523
  4,892
  5,276
  5,675
Tax expense, $m
  0
  3
  7
  12
  19
  29
  41
  57
  76
  98
  125
  156
  191
  231
  275
  323
  376
  433
  495
  560
  629
  703
  780
  861
  945
  1,033
  1,125
  1,221
  1,321
  1,425
  1,532
Net income, $m
  1
  8
  18
  33
  52
  78
  112
  153
  204
  266
  338
  421
  517
  624
  743
  874
  1,017
  1,172
  1,337
  1,514
  1,702
  1,900
  2,108
  2,327
  2,555
  2,794
  3,043
  3,302
  3,571
  3,852
  4,143

BALANCE SHEET

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Cash and short-term investments, $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
Total assets, $m
  143
  229
  353
  528
  766
  1,081
  1,486
  1,995
  2,620
  3,371
  4,258
  5,287
  6,464
  7,791
  9,270
  10,900
  12,679
  14,605
  16,675
  18,885
  21,233
  23,714
  26,327
  29,069
  31,940
  34,938
  38,064
  41,320
  44,707
  48,230
  51,891
Adjusted assets (=assets-cash), $m
  143
  229
  353
  528
  766
  1,081
  1,486
  1,995
  2,620
  3,371
  4,258
  5,287
  6,464
  7,791
  9,270
  10,900
  12,679
  14,605
  16,675
  18,885
  21,233
  23,714
  26,327
  29,069
  31,940
  34,938
  38,064
  41,320
  44,707
  48,230
  51,891
Revenue / Adjusted assets
  0.196
  0.197
  0.195
  0.197
  0.196
  0.196
  0.196
  0.196
  0.196
  0.196
  0.196
  0.196
  0.196
  0.196
  0.196
  0.196
  0.196
  0.196
  0.196
  0.196
  0.196
  0.196
  0.196
  0.196
  0.196
  0.196
  0.196
  0.196
  0.196
  0.196
  0.196
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
  -15
  -5
  -7
  -11
  -16
  -23
  -31
  -42
  -55
  -71
  -89
  -111
  -136
  -163
  -194
  -229
  -266
  -306
  -350
  -396
  -445
  -497
  -552
  -610
  -670
  -733
  -798
  -867
  -938
  -1,011
  -1,088
Total debt, $m
  85
  142
  226
  343
  503
  714
  986
  1,328
  1,747
  2,251
  2,846
  3,537
  4,326
  5,217
  6,209
  7,303
  8,497
  9,789
  11,178
  12,661
  14,236
  15,901
  17,654
  19,494
  21,420
  23,432
  25,530
  27,715
  29,988
  32,351
  34,808
Total liabilities, $m
  96
  153
  237
  354
  514
  725
  997
  1,339
  1,758
  2,262
  2,857
  3,548
  4,337
  5,228
  6,220
  7,314
  8,508
  9,800
  11,189
  12,672
  14,247
  15,912
  17,665
  19,505
  21,431
  23,443
  25,541
  27,726
  29,999
  32,362
  34,819
Total equity, $m
  47
  75
  116
  174
  252
  356
  489
  656
  862
  1,109
  1,401
  1,739
  2,127
  2,563
  3,050
  3,586
  4,171
  4,805
  5,486
  6,213
  6,986
  7,802
  8,662
  9,564
  10,508
  11,495
  12,523
  13,594
  14,709
  15,868
  17,072
Total liabilities and equity, $m
  143
  228
  353
  528
  766
  1,081
  1,486
  1,995
  2,620
  3,371
  4,258
  5,287
  6,464
  7,791
  9,270
  10,900
  12,679
  14,605
  16,675
  18,885
  21,233
  23,714
  26,327
  29,069
  31,939
  34,938
  38,064
  41,320
  44,708
  48,230
  51,891
Debt-to-equity ratio
  1.809
  1.890
  1.940
  1.980
  2.000
  2.010
  2.020
  2.020
  2.030
  2.030
  2.030
  2.030
  2.030
  2.040
  2.040
  2.040
  2.040
  2.040
  2.040
  2.040
  2.040
  2.040
  2.040
  2.040
  2.040
  2.040
  2.040
  2.040
  2.040
  2.040
  2.040
Adjusted equity ratio
  0.329
  0.329
  0.329
  0.329
  0.329
  0.329
  0.329
  0.329
  0.329
  0.329
  0.329
  0.329
  0.329
  0.329
  0.329
  0.329
  0.329
  0.329
  0.329
  0.329
  0.329
  0.329
  0.329
  0.329
  0.329
  0.329
  0.329
  0.329
  0.329
  0.329
  0.329

CASH FLOW

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Net income, $m
  1
  8
  18
  33
  52
  78
  112
  153
  204
  266
  338
  421
  517
  624
  743
  874
  1,017
  1,172
  1,337
  1,514
  1,702
  1,900
  2,108
  2,327
  2,555
  2,794
  3,043
  3,302
  3,571
  3,852
  4,143
Depreciation, amort., depletion, $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
Funds from operations, $m
  10
  8
  18
  33
  52
  78
  112
  153
  204
  266
  338
  421
  517
  624
  743
  874
  1,017
  1,172
  1,337
  1,514
  1,702
  1,900
  2,108
  2,327
  2,555
  2,794
  3,043
  3,302
  3,571
  3,852
  4,143
Change in working capital, $m
  3
  -2
  -3
  -4
  -5
  -7
  -8
  -11
  -13
  -16
  -19
  -22
  -25
  -28
  -31
  -34
  -37
  -40
  -43
  -46
  -49
  -52
  -55
  -58
  -60
  -63
  -66
  -68
  -71
  -74
  -77
Cash from operations, $m
  7
  10
  21
  36
  57
  85
  120
  164
  218
  281
  356
  443
  541
  652
  774
  908
  1,055
  1,212
  1,381
  1,560
  1,751
  1,952
  2,163
  2,384
  2,615
  2,857
  3,108
  3,370
  3,643
  3,926
  4,220
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
  -73
  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
  -77
  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
  -70
  10
  21
  36
  57
  85
  120
  164
  218
  281
  356
  443
  541
  652
  774
  908
  1,055
  1,212
  1,381
  1,560
  1,751
  1,952
  2,163
  2,384
  2,615
  2,857
  3,108
  3,370
  3,643
  3,926
  4,220
Issuance/(repayment) of debt, $m
  61
  57
  84
  117
  160
  211
  272
  341
  419
  504
  595
  691
  790
  891
  992
  1,094
  1,194
  1,292
  1,389
  1,483
  1,575
  1,665
  1,753
  1,840
  1,926
  2,012
  2,098
  2,185
  2,273
  2,363
  2,456
Issuance/(repurchase) of shares, $m
  8
  20
  23
  25
  26
  25
  22
  14
  1
  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  
  68
  77
  107
  142
  186
  236
  294
  355
  420
  504
  595
  691
  790
  891
  992
  1,094
  1,194
  1,292
  1,389
  1,483
  1,575
  1,665
  1,753
  1,840
  1,926
  2,012
  2,098
  2,185
  2,273
  2,363
  2,456
Total cash flow (excl. dividends), $m
  -3
  87
  127
  179
  243
  321
  414
  519
  638
  786
  952
  1,134
  1,331
  1,542
  1,766
  2,002
  2,248
  2,504
  2,770
  3,044
  3,326
  3,617
  3,916
  4,224
  4,542
  4,869
  5,206
  5,555
  5,916
  6,289
  6,676
Retained Cash Flow (-), $m
  -13
  -28
  -41
  -58
  -78
  -104
  -133
  -167
  -205
  -247
  -292
  -339
  -387
  -437
  -487
  -536
  -585
  -634
  -681
  -727
  -772
  -816
  -860
  -902
  -944
  -986
  -1,029
  -1,071
  -1,114
  -1,159
  -1,204
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
 
  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
 
  59
  86
  121
  165
  218
  280
  352
  432
  538
  660
  795
  944
  1,106
  1,280
  1,466
  1,663
  1,871
  2,089
  2,316
  2,554
  2,800
  3,056
  3,322
  3,597
  3,882
  4,178
  4,484
  4,801
  5,130
  5,472
Discount rate, %
 
  10.90
  11.45
  12.02
  12.62
  13.25
  13.91
  14.61
  15.34
  16.10
  16.91
  17.75
  18.64
  19.57
  20.55
  21.58
  22.66
  23.79
  24.98
  26.23
  27.54
  28.92
  30.37
  31.89
  33.48
  35.15
  36.91
  38.76
  40.69
  42.73
  44.87
PV of cash for distribution, $m
 
  53
  69
  86
  102
  117
  128
  136
  138
  140
  138
  132
  121
  108
  93
  78
  63
  50
  38
  28
  20
  14
  9
  6
  4
  2
  1
  1
  0
  0
  0
Current shareholders' claim on cash, %
  100
  61.9
  43.2
  33.1
  27.2
  23.8
  21.9
  21.0
  21.0
  21.0
  21.0
  21.0
  21.0
  21.0
  21.0
  21.0
  21.0
  21.0
  21.0
  21.0
  21.0
  21.0
  21.0
  21.0
  21.0
  21.0
  21.0
  21.0
  21.0
  21.0
  21.0

Top Ships Inc. is an international provider of oil, petroleum products and chemicals transportation services. The Company owns and operates eco medium range (MR) tanker vessels focusing on the transportation of crude oil, petroleum products (clean and dirty) and bulk liquid chemicals. The Company's fleet includes over two chartered-in 50,000 deadweight ton (dwt) product/chemical tankers vessels, the Motor Tanker (M/T) Stenaweco Energy and the M/T Stenaweco Evolution; approximately two 39,000 dwt product/chemical tankers vessels, the M/T Eco Fleet and the M/T Eco Revolution, and over two 50,000 dwt product/chemical tankers scheduled for delivery from Hyundai Dockyard. Its newbuilding fleet consists of Hull No S414 (tbn M/T Stenaweco Excellence) and Hull No S417 (tbn M/T Nord Valiant). The Company's subsidiaries include Ocean Holdings Inc., Top Tanker Management Inc. and Lyndon International Co.

FINANCIAL RATIOS  of  TOP Ships (TOPS)

Valuation Ratios
P/E Ratio 0
Price to Sales 0
Price to Book 0
Price to Tangible Book
Price to Cash Flow 0
Price to Free Cash Flow 0
Growth Rates
Sales Growth Rate 115.4%
Sales - 3 Yr. Growth Rate %
EPS Growth Rate %
EPS - 3 Yr. Growth Rate %
Capital Spending Gr. Rate 37.7%
Cap. Spend. - 3 Yr. Gr. Rate 39.1%
Financial Strength
Quick Ratio 0
Current Ratio 0.1
LT Debt to Equity 155.3%
Total Debt to Equity 180.9%
Interest Coverage 2
Management Effectiveness
Return On Assets 2.8%
Ret/ On Assets - 3 Yr. Avg. -1.2%
Return On Total Capital 1.1%
Ret/ On T. Cap. - 3 Yr. Avg. -2.1%
Return On Equity 2.5%
Return On Equity - 3 Yr. Avg. -3.5%
Asset Turnover 0.3
Profitability Ratios
Gross Margin 100%
Gross Margin - 3 Yr. Avg. 91.7%
EBITDA Margin 25%
EBITDA Margin - 3 Yr. Avg. 21.2%
Operating Margin 14.3%
Oper. Margin - 3 Yr. Avg. -13.2%
Pre-Tax Margin 3.6%
Pre-Tax Margin - 3 Yr. Avg. 3.1%
Net Profit Margin 3.6%
Net Profit Margin - 3 Yr. Avg. 3.1%
Effective Tax Rate 0%
Eff/ Tax Rate - 3 Yr. Avg. 0%
Payout Ratio 0%

TOPS stock valuation input parameters

Revenue. Company's revenue (or sales) is always the starting point of any cash flow forecast. In the TOPS stock intrinsic value calculation we used $28 million for the last fiscal year's total revenue generated by TOP Ships. The default revenue input number comes from 2016 income statement of TOP Ships. 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 TOPS 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 10.9%, whose default value for TOPS is calculated based on our internal credit rating of TOP Ships, 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 TOP Ships.
    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 TOPS stock the variable cost ratio is equal to 32.1%.

Fixed operating expenses is just that - expenses that are not dependant on the volume of production. They are set to $16 million in the base year in the intrinsic value calculation for TOPS 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 3.7% for TOP Ships.

Corporate tax rate of 27% is the nominal tax rate for TOP Ships. 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 TOPS 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 TOPS are equal to 0%.

Life of production assets of 0 years is the average useful life of capital assets used in TOP Ships 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 TOPS is equal to -10.7%. 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 - $47 million for TOP Ships - 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 10.149 million for TOP Ships 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 TOP Ships at the current share price and the inputted number of shares is $0.0 billion.

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COMPANY NEWS

▶ Trump signing the tax bill would be a 'buy the news' event   [Dec-04-17 11:13AM  Yahoo Finance Video]
▶ Does Top Ships Incs (TOPS) Debt Level Pose A Serious Problem?   [Oct-24-17 07:08PM  Simply Wall St.]
Financial statements of TOPS
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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