Intrinsic value of Aegion Corp - AEGN

Previous Close

$16.30

  Intrinsic Value

$2.80

stock screener

  Rating & Target

str. sell

-83%

Previous close

$16.30

 
Intrinsic value

$2.80

 
Up/down potential

-83%

 
Rating

str. sell

We calculate the intrinsic value of AEGN 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 0.5

 

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, %
  2.00
  2.30
  2.57
  2.81
  3.03
  3.23
  3.41
  3.57
  3.71
  3.84
  3.95
  4.06
  4.15
  4.24
  4.31
  4.38
  4.44
  4.50
  4.55
  4.59
  4.64
  4.67
  4.70
  4.73
  4.76
  4.78
  4.81
  4.83
  4.84
  4.86
Revenue, $m
  1,361
  1,392
  1,428
  1,468
  1,512
  1,561
  1,614
  1,672
  1,734
  1,801
  1,872
  1,948
  2,029
  2,115
  2,206
  2,302
  2,405
  2,513
  2,627
  2,748
  2,875
  3,010
  3,151
  3,300
  3,458
  3,623
  3,797
  3,980
  4,173
  4,376
Variable operating expenses, $m
  1,404
  1,436
  1,473
  1,514
  1,559
  1,609
  1,664
  1,723
  1,786
  1,854
  1,917
  1,994
  2,077
  2,165
  2,259
  2,358
  2,462
  2,573
  2,690
  2,814
  2,944
  3,082
  3,227
  3,380
  3,540
  3,710
  3,888
  4,076
  4,273
  4,481
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
  1,404
  1,436
  1,473
  1,514
  1,559
  1,609
  1,664
  1,723
  1,786
  1,854
  1,917
  1,994
  2,077
  2,165
  2,259
  2,358
  2,462
  2,573
  2,690
  2,814
  2,944
  3,082
  3,227
  3,380
  3,540
  3,710
  3,888
  4,076
  4,273
  4,481
Operating income, $m
  -43
  -44
  -45
  -46
  -47
  -48
  -49
  -51
  -52
  -54
  -45
  -47
  -49
  -51
  -53
  -55
  -58
  -60
  -63
  -66
  -69
  -72
  -76
  -79
  -83
  -87
  -91
  -95
  -100
  -105
EBITDA, $m
  -9
  -9
  -10
  -10
  -10
  -11
  -11
  -11
  -12
  -12
  -13
  -13
  -14
  -14
  -15
  -15
  -16
  -17
  -18
  -18
  -19
  -20
  -21
  -22
  -23
  -24
  -26
  -27
  -28
  -29
Interest expense (income), $m
  11
  17
  17
  18
  19
  20
  21
  22
  23
  24
  25
  27
  28
  30
  32
  34
  36
  38
  40
  42
  45
  47
  50
  53
  56
  59
  62
  66
  70
  74
  78
Earnings before tax, $m
  -60
  -61
  -63
  -65
  -67
  -69
  -71
  -74
  -76
  -79
  -72
  -75
  -79
  -82
  -86
  -91
  -95
  -100
  -105
  -110
  -116
  -122
  -128
  -135
  -142
  -149
  -157
  -165
  -174
  -183
Tax expense, $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
Net income, $m
  -60
  -61
  -63
  -65
  -67
  -69
  -71
  -74
  -76
  -79
  -72
  -75
  -79
  -82
  -86
  -91
  -95
  -100
  -105
  -110
  -116
  -122
  -128
  -135
  -142
  -149
  -157
  -165
  -174
  -183

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
  1,012
  1,036
  1,062
  1,092
  1,125
  1,162
  1,201
  1,244
  1,290
  1,340
  1,393
  1,449
  1,509
  1,573
  1,641
  1,713
  1,789
  1,870
  1,955
  2,045
  2,139
  2,239
  2,345
  2,456
  2,573
  2,696
  2,825
  2,962
  3,105
  3,256
Adjusted assets (=assets-cash), $m
  1,012
  1,036
  1,062
  1,092
  1,125
  1,162
  1,201
  1,244
  1,290
  1,340
  1,393
  1,449
  1,509
  1,573
  1,641
  1,713
  1,789
  1,870
  1,955
  2,045
  2,139
  2,239
  2,345
  2,456
  2,573
  2,696
  2,825
  2,962
  3,105
  3,256
Revenue / Adjusted assets
  1.345
  1.344
  1.345
  1.344
  1.344
  1.343
  1.344
  1.344
  1.344
  1.344
  1.344
  1.344
  1.345
  1.345
  1.344
  1.344
  1.344
  1.344
  1.344
  1.344
  1.344
  1.344
  1.344
  1.344
  1.344
  1.344
  1.344
  1.344
  1.344
  1.344
Average production assets, $m
  308
  315
  323
  332
  342
  353
  365
  378
  392
  407
  423
  440
  458
  478
  498
  520
  543
  568
  594
  621
  650
  680
  712
  746
  781
  819
  858
  900
  943
  989
Working capital, $m
  211
  216
  221
  228
  234
  242
  250
  259
  269
  279
  290
  302
  314
  328
  342
  357
  373
  390
  407
  426
  446
  466
  488
  512
  536
  562
  589
  617
  647
  678
Total debt, $m
  322
  335
  349
  365
  383
  402
  423
  446
  471
  497
  525
  556
  588
  622
  658
  697
  737
  780
  826
  874
  924
  978
  1,034
  1,093
  1,156
  1,221
  1,290
  1,363
  1,440
  1,520
Total liabilities, $m
  541
  553
  567
  583
  601
  620
  641
  664
  689
  715
  744
  774
  806
  840
  876
  915
  955
  998
  1,044
  1,092
  1,142
  1,196
  1,252
  1,311
  1,374
  1,439
  1,509
  1,581
  1,658
  1,739
Total equity, $m
  472
  483
  495
  509
  524
  541
  560
  580
  601
  624
  649
  675
  703
  733
  765
  798
  834
  871
  911
  953
  997
  1,044
  1,093
  1,144
  1,199
  1,256
  1,317
  1,380
  1,447
  1,517
Total liabilities and equity, $m
  1,013
  1,036
  1,062
  1,092
  1,125
  1,161
  1,201
  1,244
  1,290
  1,339
  1,393
  1,449
  1,509
  1,573
  1,641
  1,713
  1,789
  1,869
  1,955
  2,045
  2,139
  2,240
  2,345
  2,455
  2,573
  2,695
  2,826
  2,961
  3,105
  3,256
Debt-to-equity ratio
  0.680
  0.690
  0.710
  0.720
  0.730
  0.740
  0.760
  0.770
  0.780
  0.800
  0.810
  0.820
  0.840
  0.850
  0.860
  0.870
  0.880
  0.900
  0.910
  0.920
  0.930
  0.940
  0.950
  0.960
  0.960
  0.970
  0.980
  0.990
  1.000
  1.000
Adjusted equity ratio
  0.466
  0.466
  0.466
  0.466
  0.466
  0.466
  0.466
  0.466
  0.466
  0.466
  0.466
  0.466
  0.466
  0.466
  0.466
  0.466
  0.466
  0.466
  0.466
  0.466
  0.466
  0.466
  0.466
  0.466
  0.466
  0.466
  0.466
  0.466
  0.466
  0.466

CASH FLOW

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Net income, $m
  -60
  -61
  -63
  -65
  -67
  -69
  -71
  -74
  -76
  -79
  -72
  -75
  -79
  -82
  -86
  -91
  -95
  -100
  -105
  -110
  -116
  -122
  -128
  -135
  -142
  -149
  -157
  -165
  -174
  -183
Depreciation, amort., depletion, $m
  34
  35
  35
  36
  37
  38
  39
  40
  41
  42
  32
  34
  35
  36
  38
  40
  41
  43
  45
  47
  50
  52
  54
  57
  60
  63
  66
  69
  72
  75
Funds from operations, $m
  -26
  -27
  -28
  -29
  -30
  -31
  -33
  -34
  -36
  -38
  -39
  -41
  -44
  -46
  -48
  -51
  -54
  -57
  -60
  -63
  -67
  -70
  -74
  -78
  -82
  -87
  -91
  -96
  -102
  -107
Change in working capital, $m
  4
  5
  6
  6
  7
  8
  8
  9
  10
  10
  11
  12
  13
  13
  14
  15
  16
  17
  18
  19
  20
  21
  22
  23
  24
  26
  27
  28
  30
  31
Cash from operations, $m
  -30
  -32
  -33
  -35
  -37
  -39
  -41
  -43
  -45
  -48
  -50
  -53
  -56
  -59
  -63
  -66
  -70
  -73
  -78
  -82
  -86
  -91
  -96
  -101
  -107
  -112
  -118
  -125
  -132
  -139
Maintenance CAPEX, $m
  -23
  -23
  -24
  -25
  -25
  -26
  -27
  -28
  -29
  -30
  -31
  -32
  -34
  -35
  -36
  -38
  -40
  -41
  -43
  -45
  -47
  -50
  -52
  -54
  -57
  -60
  -63
  -66
  -69
  -72
New CAPEX, $m
  -6
  -7
  -8
  -9
  -10
  -11
  -12
  -13
  -14
  -15
  -16
  -17
  -18
  -19
  -21
  -22
  -23
  -24
  -26
  -27
  -29
  -30
  -32
  -34
  -36
  -37
  -39
  -41
  -44
  -46
Cash from investing activities, $m
  -29
  -30
  -32
  -34
  -35
  -37
  -39
  -41
  -43
  -45
  -47
  -49
  -52
  -54
  -57
  -60
  -63
  -65
  -69
  -72
  -76
  -80
  -84
  -88
  -93
  -97
  -102
  -107
  -113
  -118
Free cash flow, $m
  -59
  -62
  -65
  -69
  -72
  -76
  -80
  -84
  -88
  -93
  -98
  -103
  -108
  -114
  -120
  -126
  -132
  -139
  -147
  -154
  -162
  -171
  -180
  -189
  -199
  -209
  -220
  -232
  -244
  -256
Issuance/(repayment) of debt, $m
  11
  12
  14
  16
  18
  19
  21
  23
  25
  26
  28
  30
  32
  34
  36
  38
  41
  43
  45
  48
  51
  53
  56
  59
  62
  66
  69
  73
  77
  81
Issuance/(repurchase) of shares, $m
  69
  72
  75
  79
  82
  86
  90
  94
  98
  102
  96
  101
  107
  112
  118
  124
  131
  138
  145
  152
  160
  169
  177
  187
  196
  207
  217
  229
  241
  253
Cash from financing (excl. dividends), $m  
  80
  84
  89
  95
  100
  105
  111
  117
  123
  128
  124
  131
  139
  146
  154
  162
  172
  181
  190
  200
  211
  222
  233
  246
  258
  273
  286
  302
  318
  334
Total cash flow (excl. dividends), $m
  21
  23
  24
  26
  28
  29
  31
  33
  34
  36
  27
  29
  31
  33
  35
  37
  39
  41
  43
  46
  48
  51
  54
  57
  60
  63
  66
  70
  73
  77
Retained Cash Flow (-), $m
  -69
  -72
  -75
  -79
  -82
  -86
  -90
  -94
  -98
  -102
  -96
  -101
  -107
  -112
  -118
  -124
  -131
  -138
  -145
  -152
  -160
  -169
  -177
  -187
  -196
  -207
  -217
  -229
  -241
  -253
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
  -48
  -50
  -51
  -53
  -54
  -56
  -59
  -61
  -64
  -66
  -69
  -73
  -76
  -80
  -83
  -88
  -92
  -96
  -101
  -106
  -112
  -118
  -124
  -130
  -137
  -144
  -151
  -159
  -167
  -176
Discount rate, %
  6.30
  6.62
  6.95
  7.29
  7.66
  8.04
  8.44
  8.86
  9.31
  9.77
  10.26
  10.78
  11.31
  11.88
  12.47
  13.10
  13.75
  14.44
  15.16
  15.92
  16.72
  17.55
  18.43
  19.35
  20.32
  21.33
  22.40
  23.52
  24.70
  25.93
PV of cash for distribution, $m
  -45
  -44
  -42
  -40
  -38
  -36
  -33
  -31
  -29
  -26
  -24
  -21
  -19
  -17
  -14
  -12
  -10
  -9
  -7
  -6
  -4
  -3
  -3
  -2
  -1
  -1
  -1
  0
  0
  0
Current shareholders' claim on cash, %
  88.2
  77.6
  68.1
  59.6
  52.1
  45.4
  39.6
  34.4
  29.9
  26.0
  22.8
  20.0
  17.5
  15.4
  13.4
  11.7
  10.2
  8.9
  7.8
  6.7
  5.9
  5.1
  4.4
  3.8
  3.3
  2.9
  2.5
  2.2
  1.9
  1.6

Aegion Corporation (Aegion) is engaged in providing infrastructure protection and maintenance. The Company operates through three segments: Infrastructure Solutions, Corrosion Protection and Energy Services. The Company offers service solutions, including rehabilitation of water and wastewater pipelines with Insituform cured-in-place pipe (CIPP) products; fusible polyvinyl chloride products for rehabilitation; fiber reinforced polymer systems for rehabilitation and strengthening; cathodic protection for corrosion engineering control and infrastructure rehabilitation; pipe coatings for corrosion control and prevention; high density polyethylene (HDPE) pipe lining for corrosion control, abrasion protection and pipeline rehabilitation, and construction and maintenance of oil and gas facilities. The Company's Insituform CIPP Process for the rehabilitation of sewers, pipelines and other conduits utilizes a custom-manufactured tube, or liner, made of synthetic fiber.

FINANCIAL RATIOS  of  Aegion Corp (AEGN)

Valuation Ratios
P/E Ratio 19.1
Price to Sales 0.5
Price to Book 1
Price to Tangible Book
Price to Cash Flow 7.6
Price to Free Cash Flow 16.8
Growth Rates
Sales Growth Rate -8.4%
Sales - 3 Yr. Growth Rate %
EPS Growth Rate %
EPS - 3 Yr. Growth Rate %
Capital Spending Gr. Rate 29%
Cap. Spend. - 3 Yr. Gr. Rate 7.4%
Financial Strength
Quick Ratio 7
Current Ratio 0.3
LT Debt to Equity 61.7%
Total Debt to Equity 65.2%
Interest Coverage 4
Management Effectiveness
Return On Assets 3.1%
Ret/ On Assets - 3 Yr. Avg. -2%
Return On Total Capital 3.1%
Ret/ On T. Cap. - 3 Yr. Avg. -0.4%
Return On Equity 5.1%
Return On Equity - 3 Yr. Avg. -0.6%
Asset Turnover 1
Profitability Ratios
Gross Margin 20.7%
Gross Margin - 3 Yr. Avg. 20.8%
EBITDA Margin 7.6%
EBITDA Margin - 3 Yr. Avg. 4.4%
Operating Margin 4.2%
Oper. Margin - 3 Yr. Avg. 1.4%
Pre-Tax Margin 2.9%
Pre-Tax Margin - 3 Yr. Avg. 0.1%
Net Profit Margin 2.4%
Net Profit Margin - 3 Yr. Avg. -0.3%
Effective Tax Rate 17.1%
Eff/ Tax Rate - 3 Yr. Avg. 309.4%
Payout Ratio 0%

AEGN stock valuation input parameters

Revenue. Company's revenue (or sales) is always the starting point of any cash flow forecast. In the AEGN stock intrinsic value calculation we used $1334 million for the last fiscal year's total revenue generated by Aegion Corp. The default revenue input number comes from 0001 income statement of Aegion Corp. 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 AEGN stock valuation model: a) initial revenue growth rate of 2% 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 6.3%, whose default value for AEGN is calculated based on our internal credit rating of Aegion Corp, 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 Aegion Corp.
    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 AEGN stock the variable cost ratio is equal to 103.2%.

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 AEGN 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 Aegion Corp.

Corporate tax rate of 27% is the nominal tax rate for Aegion Corp. 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 AEGN 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 AEGN are equal to 22.6%.

Life of production assets of 13.1 years is the average useful life of capital assets used in Aegion Corp 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 AEGN is equal to 15.5%. 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 - $462.737 million for Aegion Corp - 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 31.754 million for Aegion Corp 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 Aegion Corp at the current share price and the inputted number of shares is $0.5 billion.

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