Intrinsic value of Adams Resources&Energy - AE

Previous Close

$39.79

  Intrinsic Value

$77.16

stock screener

  Rating & Target

str. buy

+94%

Previous close

$39.79

 
Intrinsic value

$77.16

 
Up/down potential

+94%

 
Rating

str. buy

We calculate the intrinsic value of AE 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 0001), $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 0.2

 

FINANCIAL STATEMENTS FORECAST and PRESENT VALUE CALCULATION

Fiscal year
   2
   3
   4
   5
   6
   7
   8
   9
   10
   11
   12
   13
   14
   15
   16
   17
   18
   19
   20
   21
   22
   23
   24
   25
   26
   27
   28
   29
   30
   31

INCOME STATEMENT

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Revenue growth rate, %
  43.50
  39.65
  36.19
  33.07
  30.26
  27.73
  25.46
  23.41
  21.57
  19.92
  18.42
  17.08
  15.87
  14.79
  13.81
  12.93
  12.13
  11.42
  10.78
  10.20
  9.68
  9.21
  8.79
  8.41
  8.07
  7.76
  7.49
  7.24
  7.01
  6.81
Revenue, $m
  1,897
  2,649
  3,608
  4,801
  6,254
  7,988
  10,022
  12,369
  15,037
  18,032
  21,354
  25,002
  28,971
  33,254
  37,846
  42,738
  47,924
  53,397
  59,153
  65,187
  71,497
  78,084
  84,949
  92,095
  99,528
  107,255
  115,286
  123,631
  132,304
  141,318
Variable operating expenses, $m
  1,882
  2,628
  3,579
  4,763
  6,204
  7,924
  9,942
  12,270
  14,917
  17,888
  21,183
  24,802
  28,739
  32,988
  37,543
  42,396
  47,541
  52,970
  58,680
  64,665
  70,925
  77,460
  84,269
  91,358
  98,732
  106,397
  114,364
  122,642
  131,245
  140,188
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
  1,882
  2,628
  3,579
  4,763
  6,204
  7,924
  9,942
  12,270
  14,917
  17,888
  21,183
  24,802
  28,739
  32,988
  37,543
  42,396
  47,541
  52,970
  58,680
  64,665
  70,925
  77,460
  84,269
  91,358
  98,732
  106,397
  114,364
  122,642
  131,245
  140,188
Operating income, $m
  15
  21
  29
  38
  50
  64
  80
  99
  120
  144
  171
  200
  232
  266
  303
  342
  383
  427
  473
  521
  572
  625
  680
  737
  796
  858
  922
  989
  1,058
  1,131
EBITDA, $m
  26
  37
  50
  66
  86
  110
  138
  171
  208
  249
  295
  345
  400
  459
  522
  590
  661
  737
  816
  900
  987
  1,078
  1,172
  1,271
  1,373
  1,480
  1,591
  1,706
  1,826
  1,950
Interest expense (income), $m
  0
  0
  3
  7
  13
  19
  27
  37
  48
  61
  76
  93
  111
  131
  153
  177
  203
  230
  258
  289
  321
  354
  389
  426
  464
  503
  544
  587
  632
  678
  726
Earnings before tax, $m
  15
  18
  21
  26
  31
  36
  43
  51
  59
  68
  78
  89
  100
  113
  126
  139
  154
  169
  184
  201
  218
  236
  254
  273
  293
  314
  335
  357
  380
  404
Tax expense, $m
  4
  5
  6
  7
  8
  10
  12
  14
  16
  18
  21
  24
  27
  30
  34
  38
  42
  46
  50
  54
  59
  64
  69
  74
  79
  85
  90
  96
  103
  109
Net income, $m
  11
  13
  16
  19
  22
  27
  31
  37
  43
  50
  57
  65
  73
  82
  92
  102
  112
  123
  135
  147
  159
  172
  185
  199
  214
  229
  245
  261
  278
  295

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
Total assets, $m
  406
  567
  772
  1,027
  1,337
  1,708
  2,143
  2,645
  3,216
  3,856
  4,567
  5,347
  6,196
  7,112
  8,094
  9,140
  10,249
  11,419
  12,650
  13,941
  15,290
  16,699
  18,167
  19,695
  21,285
  22,937
  24,655
  26,440
  28,294
  30,222
Adjusted assets (=assets-cash), $m
  406
  567
  772
  1,027
  1,337
  1,708
  2,143
  2,645
  3,216
  3,856
  4,567
  5,347
  6,196
  7,112
  8,094
  9,140
  10,249
  11,419
  12,650
  13,941
  15,290
  16,699
  18,167
  19,695
  21,285
  22,937
  24,655
  26,440
  28,294
  30,222
Revenue / Adjusted assets
  4.672
  4.672
  4.674
  4.675
  4.678
  4.677
  4.677
  4.676
  4.676
  4.676
  4.676
  4.676
  4.676
  4.676
  4.676
  4.676
  4.676
  4.676
  4.676
  4.676
  4.676
  4.676
  4.676
  4.676
  4.676
  4.676
  4.676
  4.676
  4.676
  4.676
Average production assets, $m
  55
  77
  105
  139
  181
  232
  291
  359
  436
  523
  619
  725
  840
  964
  1,098
  1,239
  1,390
  1,549
  1,715
  1,890
  2,073
  2,264
  2,464
  2,671
  2,886
  3,110
  3,343
  3,585
  3,837
  4,098
Working capital, $m
  9
  13
  18
  24
  31
  40
  50
  62
  75
  90
  107
  125
  145
  166
  189
  214
  240
  267
  296
  326
  357
  390
  425
  460
  498
  536
  576
  618
  662
  707
Total debt, $m
  61
  138
  236
  359
  508
  686
  895
  1,136
  1,410
  1,717
  2,058
  2,433
  2,840
  3,280
  3,751
  4,253
  4,786
  5,347
  5,938
  6,558
  7,205
  7,882
  8,586
  9,320
  10,083
  10,876
  11,700
  12,557
  13,447
  14,373
Total liabilities, $m
  195
  272
  370
  493
  642
  820
  1,029
  1,270
  1,544
  1,851
  2,192
  2,566
  2,974
  3,414
  3,885
  4,387
  4,919
  5,481
  6,072
  6,692
  7,339
  8,015
  8,720
  9,454
  10,217
  11,010
  11,834
  12,691
  13,581
  14,507
Total equity, $m
  211
  295
  401
  534
  695
  888
  1,115
  1,375
  1,672
  2,005
  2,375
  2,780
  3,222
  3,698
  4,209
  4,753
  5,329
  5,938
  6,578
  7,249
  7,951
  8,683
  9,447
  10,242
  11,068
  11,927
  12,821
  13,749
  14,713
  15,715
Total liabilities and equity, $m
  406
  567
  771
  1,027
  1,337
  1,708
  2,144
  2,645
  3,216
  3,856
  4,567
  5,346
  6,196
  7,112
  8,094
  9,140
  10,248
  11,419
  12,650
  13,941
  15,290
  16,698
  18,167
  19,696
  21,285
  22,937
  24,655
  26,440
  28,294
  30,222
Debt-to-equity ratio
  0.290
  0.470
  0.590
  0.670
  0.730
  0.770
  0.800
  0.830
  0.840
  0.860
  0.870
  0.870
  0.880
  0.890
  0.890
  0.890
  0.900
  0.900
  0.900
  0.900
  0.910
  0.910
  0.910
  0.910
  0.910
  0.910
  0.910
  0.910
  0.910
  0.910
Adjusted equity ratio
  0.520
  0.520
  0.520
  0.520
  0.520
  0.520
  0.520
  0.520
  0.520
  0.520
  0.520
  0.520
  0.520
  0.520
  0.520
  0.520
  0.520
  0.520
  0.520
  0.520
  0.520
  0.520
  0.520
  0.520
  0.520
  0.520
  0.520
  0.520
  0.520
  0.520

CASH FLOW

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Net income, $m
  11
  13
  16
  19
  22
  27
  31
  37
  43
  50
  57
  65
  73
  82
  92
  102
  112
  123
  135
  147
  159
  172
  185
  199
  214
  229
  245
  261
  278
  295
Depreciation, amort., depletion, $m
  11
  15
  21
  28
  36
  46
  58
  72
  87
  105
  124
  145
  168
  193
  220
  248
  278
  310
  343
  378
  415
  453
  493
  534
  577
  622
  669
  717
  767
  820
Funds from operations, $m
  22
  28
  37
  47
  59
  73
  90
  109
  130
  154
  181
  210
  241
  275
  311
  350
  390
  433
  478
  525
  574
  625
  678
  734
  791
  851
  913
  978
  1,045
  1,115
Change in working capital, $m
  3
  4
  5
  6
  7
  9
  10
  12
  13
  15
  17
  18
  20
  21
  23
  24
  26
  27
  29
  30
  32
  33
  34
  36
  37
  39
  40
  42
  43
  45
Cash from operations, $m
  19
  25
  32
  41
  51
  64
  79
  97
  117
  139
  164
  192
  221
  254
  288
  325
  364
  406
  449
  495
  542
  592
  644
  698
  754
  812
  873
  936
  1,002
  1,070
Maintenance CAPEX, $m
  -8
  -11
  -15
  -21
  -28
  -36
  -46
  -58
  -72
  -87
  -105
  -124
  -145
  -168
  -193
  -220
  -248
  -278
  -310
  -343
  -378
  -415
  -453
  -493
  -534
  -577
  -622
  -669
  -717
  -767
New CAPEX, $m
  -17
  -22
  -28
  -35
  -42
  -50
  -59
  -68
  -77
  -87
  -96
  -106
  -115
  -124
  -133
  -142
  -150
  -159
  -167
  -175
  -183
  -191
  -199
  -207
  -216
  -224
  -233
  -242
  -252
  -261
Cash from investing activities, $m
  -25
  -33
  -43
  -56
  -70
  -86
  -105
  -126
  -149
  -174
  -201
  -230
  -260
  -292
  -326
  -362
  -398
  -437
  -477
  -518
  -561
  -606
  -652
  -700
  -750
  -801
  -855
  -911
  -969
  -1,028
Free cash flow, $m
  -6
  -8
  -11
  -15
  -19
  -22
  -26
  -29
  -32
  -35
  -37
  -38
  -39
  -39
  -38
  -36
  -34
  -31
  -28
  -24
  -19
  -14
  -8
  -2
  4
  11
  18
  25
  33
  41
Issuance/(repayment) of debt, $m
  59
  77
  98
  122
  149
  178
  209
  241
  274
  307
  341
  374
  407
  440
  471
  502
  532
  562
  591
  619
  648
  676
  705
  734
  763
  793
  824
  857
  890
  925
Issuance/(repurchase) of shares, $m
  53
  71
  91
  114
  139
  166
  195
  224
  254
  283
  312
  341
  368
  394
  419
  442
  464
  485
  505
  524
  543
  561
  578
  595
  613
  630
  649
  667
  687
  707
Cash from financing (excl. dividends), $m  
  112
  148
  189
  236
  288
  344
  404
  465
  528
  590
  653
  715
  775
  834
  890
  944
  996
  1,047
  1,096
  1,143
  1,191
  1,237
  1,283
  1,329
  1,376
  1,423
  1,473
  1,524
  1,577
  1,632
Total cash flow (excl. dividends), $m
  106
  140
  178
  222
  270
  322
  378
  436
  495
  556
  617
  677
  737
  795
  852
  908
  963
  1,016
  1,069
  1,120
  1,172
  1,223
  1,274
  1,327
  1,380
  1,435
  1,491
  1,549
  1,610
  1,674
Retained Cash Flow (-), $m
  -64
  -84
  -107
  -133
  -162
  -193
  -226
  -261
  -297
  -333
  -369
  -406
  -441
  -476
  -511
  -544
  -577
  -609
  -640
  -671
  -702
  -732
  -763
  -795
  -827
  -859
  -893
  -928
  -964
  -1,002
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
  43
  56
  71
  89
  108
  129
  151
  175
  199
  223
  247
  272
  295
  319
  342
  364
  386
  407
  429
  449
  470
  490
  511
  532
  553
  575
  598
  621
  646
  671
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
  41
  51
  62
  73
  84
  94
  102
  109
  114
  117
  117
  116
  112
  107
  100
  93
  84
  75
  66
  57
  49
  41
  33
  27
  22
  17
  13
  10
  7
  5
Current shareholders' claim on cash, %
  76.1
  58.8
  46.3
  37.1
  30.2
  24.9
  20.9
  17.8
  15.3
  13.3
  11.7
  10.4
  9.3
  8.4
  7.7
  7.0
  6.5
  6.0
  5.6
  5.2
  4.9
  4.6
  4.4
  4.1
  3.9
  3.7
  3.6
  3.4
  3.3
  3.1

Adams Resources & Energy, Inc., along with its subsidiaries, is engaged in the business of crude oil marketing, tank truck transportation of liquid chemicals, and oil and gas exploration and production. The Company's segments include Marketing Segment, Transportation Segment, and Oil and Gas Segment. The Company manages its Marketing Segment through its subsidiary, Gulfmark Energy, Inc., which is engaged in marketing of crude oil. It operates approximately 210 tractor-trailer rigs and maintains over 120 pipeline inventory locations or injection stations. The Company operates its Transportation Segment, through Service Transport Company, which transports liquid chemicals. Its Service Transport Company subsidiary operates over 320 truck tractors, of which over 290 are Company-owned with over 30 independent owner-operator units. The Oil and Gas Segment operates through Adams Resources Exploration Corporation subsidiary, which explores and develops domestic oil and natural gas properties.

FINANCIAL RATIOS  of  Adams Resources&Energy (AE)

Valuation Ratios
P/E Ratio 56
Price to Sales 0.2
Price to Book 1.1
Price to Tangible Book
Price to Cash Flow 24
Price to Free Cash Flow -167.9
Growth Rates
Sales Growth Rate -43.4%
Sales - 3 Yr. Growth Rate %
EPS Growth Rate %
EPS - 3 Yr. Growth Rate %
Capital Spending Gr. Rate -27.3%
Cap. Spend. - 3 Yr. Gr. Rate -22.2%
Financial Strength
Quick Ratio NaN
Current Ratio 0
LT Debt to Equity 0%
Total Debt to Equity 0%
Interest Coverage 0
Management Effectiveness
Return On Assets 1.2%
Ret/ On Assets - 3 Yr. Avg. 0.9%
Return On Total Capital 2%
Ret/ On T. Cap. - 3 Yr. Avg. 1.9%
Return On Equity 2%
Return On Equity - 3 Yr. Avg. 1.9%
Asset Turnover 4.5
Profitability Ratios
Gross Margin 3.3%
Gross Margin - 3 Yr. Avg. 1.9%
EBITDA Margin 2.4%
EBITDA Margin - 3 Yr. Avg. 1.4%
Operating Margin 0.6%
Oper. Margin - 3 Yr. Avg. 0.2%
Pre-Tax Margin 0.6%
Pre-Tax Margin - 3 Yr. Avg. 0.3%
Net Profit Margin 0.3%
Net Profit Margin - 3 Yr. Avg. 0.1%
Effective Tax Rate 42.9%
Eff/ Tax Rate - 3 Yr. Avg. 44.3%
Payout Ratio 133.3%

AE stock valuation input parameters

Revenue. Company's revenue (or sales) is always the starting point of any cash flow forecast. In the AE stock intrinsic value calculation we used $1322.06 million for the last fiscal year's total revenue generated by Adams Resources&Energy. The default revenue input number comes from 0001 income statement of Adams Resources&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 AE stock valuation model: a) initial revenue growth rate of 43.5% 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 AE is calculated based on our internal credit rating of Adams Resources&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 Adams Resources&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 AE stock the variable cost ratio is equal to 99.2%.

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 AE 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 5.4% for Adams Resources&Energy.

Corporate tax rate of 27% is the nominal tax rate for Adams Resources&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 AE 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 AE are equal to 2.9%.

Life of production assets of 2.8 years is the average useful life of capital assets used in Adams Resources&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 AE is equal to 0.5%. 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 - $147.119 million for Adams Resources&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 4.218 million for Adams Resources&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 Adams Resources&Energy at the current share price and the inputted number of shares is $0.2 billion.

RELATED COMPANIES Price Int.Val. Rating
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COMPANY NEWS

▶ Adams Resources: 3Q Earnings Snapshot   [Nov-07-18 05:56PM  Associated Press]
▶ Adams Resources: 2Q Earnings Snapshot   [Aug-08-18 04:17PM  Associated Press]
▶ Adams Resources: 1Q Earnings Snapshot   [May-09-18 04:55PM  Associated Press]
▶ Adams Resources & Energy, Inc. Announces CFO Resignation   [Mar-28-18 05:11PM  PR Newswire]
▶ Adams Resources posts 4Q profit   [04:15PM  Associated Press]
▶ Adams Resources reports 3Q loss   [Nov-09-17 05:13PM  Associated Press]
▶ Adams Resources reports 2Q loss   [Aug-08-17 11:35PM  Associated Press]
▶ [$$] Adams Resources Wins Court Approval to Sell Assets   [Aug-04-17 02:01PM  The Wall Street Journal]
▶ Adams Resources Announces Second Quarter 2017 Dividend   [May-10-17 04:41PM  PR Newswire]
▶ Adams Resources reports 1Q loss   [May-08-17 06:28PM  Associated Press]
▶ [$$] Adams Resources Files For Chapter 11 Protection   [Apr-21-17 05:20PM  The Wall Street Journal]
▶ Houston company's upstream subsidiary to file Ch.11   [11:15AM  American City Business Journals]
▶ Adams Resources reports 4Q loss   [Mar-15-17 07:25PM  Associated Press]
▶ Adams Resources posts 1Q profit   [May-06-16 04:53PM  AP]

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