Intrinsic value of Ameresco, Inc. - AMRC

Previous Close

$15.70

  Intrinsic Value

$12.31

stock screener

  Rating & Target

sell

-22%

Previous close

$15.70

 
Intrinsic value

$12.31

 
Up/down potential

-22%

 
Rating

sell

We calculate the intrinsic value of AMRC 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 0.7

 

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, %
  3.00
  3.20
  3.38
  3.54
  3.69
  3.82
  3.94
  4.04
  4.14
  4.23
  4.30
  4.37
  4.44
  4.49
  4.54
  4.59
  4.63
  4.67
  4.70
  4.73
  4.76
  4.78
  4.80
  4.82
  4.84
  4.86
  4.87
  4.88
  4.90
  4.91
Revenue, $m
  811
  837
  865
  895
  928
  964
  1,002
  1,042
  1,086
  1,131
  1,180
  1,232
  1,286
  1,344
  1,405
  1,470
  1,538
  1,609
  1,685
  1,765
  1,849
  1,937
  2,030
  2,128
  2,231
  2,339
  2,453
  2,573
  2,699
  2,832
Variable operating expenses, $m
  551
  568
  587
  608
  630
  654
  680
  707
  736
  767
  793
  828
  865
  904
  945
  988
  1,034
  1,082
  1,133
  1,187
  1,243
  1,302
  1,365
  1,431
  1,500
  1,573
  1,650
  1,730
  1,815
  1,904
Fixed operating expenses, $m
  202
  207
  211
  216
  221
  226
  231
  236
  241
  246
  252
  257
  263
  269
  274
  280
  287
  293
  299
  306
  313
  320
  327
  334
  341
  349
  356
  364
  372
  380
Total operating expenses, $m
  753
  775
  798
  824
  851
  880
  911
  943
  977
  1,013
  1,045
  1,085
  1,128
  1,173
  1,219
  1,268
  1,321
  1,375
  1,432
  1,493
  1,556
  1,622
  1,692
  1,765
  1,841
  1,922
  2,006
  2,094
  2,187
  2,284
Operating income, $m
  57
  61
  66
  71
  77
  84
  92
  100
  109
  119
  135
  146
  159
  172
  186
  201
  217
  234
  253
  272
  293
  315
  339
  363
  390
  418
  447
  479
  512
  547
EBITDA, $m
  71
  75
  80
  86
  92
  99
  107
  115
  125
  135
  146
  158
  171
  184
  199
  215
  231
  249
  268
  288
  310
  333
  357
  383
  410
  439
  470
  503
  537
  573
Interest expense (income), $m
  7
  13
  15
  16
  18
  19
  21
  23
  25
  27
  29
  32
  35
  37
  40
  43
  47
  50
  54
  58
  62
  66
  71
  75
  80
  86
  91
  97
  103
  110
  116
Earnings before tax, $m
  44
  47
  50
  54
  58
  63
  69
  75
  82
  89
  103
  112
  121
  132
  143
  154
  167
  181
  195
  210
  227
  244
  263
  283
  304
  327
  350
  376
  402
  431
Tax expense, $m
  12
  13
  13
  15
  16
  17
  19
  20
  22
  24
  28
  30
  33
  36
  38
  42
  45
  49
  53
  57
  61
  66
  71
  76
  82
  88
  95
  101
  109
  116
Net income, $m
  32
  34
  36
  39
  43
  46
  50
  55
  60
  65
  75
  82
  89
  96
  104
  113
  122
  132
  142
  154
  166
  178
  192
  207
  222
  238
  256
  274
  294
  315

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
  1,197
  1,236
  1,277
  1,323
  1,371
  1,424
  1,480
  1,540
  1,603
  1,671
  1,743
  1,819
  1,900
  1,985
  2,076
  2,171
  2,271
  2,377
  2,489
  2,607
  2,731
  2,861
  2,999
  3,143
  3,295
  3,456
  3,624
  3,801
  3,987
  4,182
Adjusted assets (=assets-cash), $m
  1,197
  1,236
  1,277
  1,323
  1,371
  1,424
  1,480
  1,540
  1,603
  1,671
  1,743
  1,819
  1,900
  1,985
  2,076
  2,171
  2,271
  2,377
  2,489
  2,607
  2,731
  2,861
  2,999
  3,143
  3,295
  3,456
  3,624
  3,801
  3,987
  4,182
Revenue / Adjusted assets
  0.678
  0.677
  0.677
  0.676
  0.677
  0.677
  0.677
  0.677
  0.677
  0.677
  0.677
  0.677
  0.677
  0.677
  0.677
  0.677
  0.677
  0.677
  0.677
  0.677
  0.677
  0.677
  0.677
  0.677
  0.677
  0.677
  0.677
  0.677
  0.677
  0.677
Average production assets, $m
  37
  38
  40
  41
  43
  44
  46
  48
  50
  52
  54
  57
  59
  62
  65
  68
  71
  74
  78
  81
  85
  89
  93
  98
  103
  108
  113
  118
  124
  130
Working capital, $m
  38
  39
  41
  42
  44
  45
  47
  49
  51
  53
  55
  58
  60
  63
  66
  69
  72
  76
  79
  83
  87
  91
  95
  100
  105
  110
  115
  121
  127
  133
Total debt, $m
  271
  297
  325
  355
  388
  424
  462
  502
  545
  591
  640
  691
  746
  803
  864
  929
  997
  1,068
  1,144
  1,223
  1,307
  1,396
  1,488
  1,586
  1,689
  1,797
  1,911
  2,031
  2,156
  2,289
Total liabilities, $m
  809
  835
  864
  894
  927
  963
  1,000
  1,041
  1,084
  1,130
  1,178
  1,230
  1,284
  1,342
  1,403
  1,467
  1,535
  1,607
  1,683
  1,762
  1,846
  1,934
  2,027
  2,125
  2,228
  2,336
  2,450
  2,569
  2,695
  2,827
Total equity, $m
  388
  400
  414
  429
  444
  461
  479
  499
  520
  541
  565
  589
  616
  643
  672
  703
  736
  770
  806
  845
  885
  927
  972
  1,018
  1,068
  1,120
  1,174
  1,231
  1,292
  1,355
Total liabilities and equity, $m
  1,197
  1,235
  1,278
  1,323
  1,371
  1,424
  1,479
  1,540
  1,604
  1,671
  1,743
  1,819
  1,900
  1,985
  2,075
  2,170
  2,271
  2,377
  2,489
  2,607
  2,731
  2,861
  2,999
  3,143
  3,296
  3,456
  3,624
  3,800
  3,987
  4,182
Debt-to-equity ratio
  0.700
  0.740
  0.780
  0.830
  0.870
  0.920
  0.960
  1.010
  1.050
  1.090
  1.130
  1.170
  1.210
  1.250
  1.290
  1.320
  1.350
  1.390
  1.420
  1.450
  1.480
  1.510
  1.530
  1.560
  1.580
  1.610
  1.630
  1.650
  1.670
  1.690
Adjusted equity ratio
  0.324
  0.324
  0.324
  0.324
  0.324
  0.324
  0.324
  0.324
  0.324
  0.324
  0.324
  0.324
  0.324
  0.324
  0.324
  0.324
  0.324
  0.324
  0.324
  0.324
  0.324
  0.324
  0.324
  0.324
  0.324
  0.324
  0.324
  0.324
  0.324
  0.324

CASH FLOW

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Net income, $m
  32
  34
  36
  39
  43
  46
  50
  55
  60
  65
  75
  82
  89
  96
  104
  113
  122
  132
  142
  154
  166
  178
  192
  207
  222
  238
  256
  274
  294
  315
Depreciation, amort., depletion, $m
  13
  14
  14
  14
  15
  15
  15
  16
  16
  16
  11
  11
  12
  12
  13
  14
  14
  15
  16
  16
  17
  18
  19
  20
  21
  22
  23
  24
  25
  26
Funds from operations, $m
  46
  48
  50
  54
  57
  61
  65
  70
  76
  81
  86
  93
  100
  108
  117
  126
  136
  147
  158
  170
  183
  196
  211
  226
  243
  260
  278
  298
  319
  341
Change in working capital, $m
  1
  1
  1
  1
  2
  2
  2
  2
  2
  2
  2
  2
  3
  3
  3
  3
  3
  3
  4
  4
  4
  4
  4
  5
  5
  5
  5
  6
  6
  6
Cash from operations, $m
  44
  47
  49
  52
  56
  59
  64
  68
  74
  79
  84
  91
  98
  106
  114
  123
  133
  143
  154
  166
  179
  192
  206
  222
  238
  255
  273
  292
  313
  334
Maintenance CAPEX, $m
  -7
  -7
  -8
  -8
  -8
  -9
  -9
  -9
  -10
  -10
  -10
  -11
  -11
  -12
  -12
  -13
  -14
  -14
  -15
  -16
  -16
  -17
  -18
  -19
  -20
  -21
  -22
  -23
  -24
  -25
New CAPEX, $m
  -1
  -1
  -1
  -1
  -2
  -2
  -2
  -2
  -2
  -2
  -2
  -2
  -3
  -3
  -3
  -3
  -3
  -3
  -3
  -4
  -4
  -4
  -4
  -5
  -5
  -5
  -5
  -6
  -6
  -6
Cash from investing activities, $m
  -8
  -8
  -9
  -9
  -10
  -11
  -11
  -11
  -12
  -12
  -12
  -13
  -14
  -15
  -15
  -16
  -17
  -17
  -18
  -20
  -20
  -21
  -22
  -24
  -25
  -26
  -27
  -29
  -30
  -31
Free cash flow, $m
  36
  38
  40
  43
  46
  49
  53
  57
  62
  67
  71
  77
  84
  91
  99
  107
  116
  126
  136
  147
  159
  171
  184
  198
  213
  229
  246
  264
  283
  303
Issuance/(repayment) of debt, $m
  25
  26
  28
  31
  33
  35
  38
  40
  43
  46
  49
  52
  55
  58
  61
  64
  68
  72
  76
  80
  84
  88
  93
  98
  103
  108
  114
  120
  126
  132
Issuance/(repurchase) of shares, $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 from financing (excl. dividends), $m  
  25
  26
  28
  31
  33
  35
  38
  40
  43
  46
  49
  52
  55
  58
  61
  64
  68
  72
  76
  80
  84
  88
  93
  98
  103
  108
  114
  120
  126
  132
Total cash flow (excl. dividends), $m
  60
  64
  68
  73
  79
  85
  91
  98
  105
  113
  120
  129
  139
  149
  160
  172
  184
  197
  212
  227
  242
  259
  277
  296
  316
  338
  360
  384
  409
  436
Retained Cash Flow (-), $m
  -11
  -12
  -14
  -15
  -16
  -17
  -18
  -19
  -21
  -22
  -23
  -25
  -26
  -28
  -29
  -31
  -33
  -34
  -36
  -38
  -40
  -42
  -45
  -47
  -49
  -52
  -55
  -57
  -60
  -63
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
  49
  51
  55
  59
  63
  68
  73
  78
  84
  91
  97
  104
  112
  121
  131
  141
  152
  163
  175
  188
  202
  217
  233
  249
  267
  286
  305
  326
  349
  372
Discount rate, %
  7.40
  7.77
  8.16
  8.57
  8.99
  9.44
  9.92
  10.41
  10.93
  11.48
  12.05
  12.66
  13.29
  13.95
  14.65
  15.38
  16.15
  16.96
  17.81
  18.70
  19.63
  20.62
  21.65
  22.73
  23.87
  25.06
  26.31
  27.63
  29.01
  30.46
PV of cash for distribution, $m
  46
  44
  43
  42
  41
  39
  38
  35
  33
  31
  28
  25
  22
  19
  17
  14
  12
  10
  8
  6
  5
  4
  3
  2
  1
  1
  1
  0
  0
  0
Current shareholders' claim on cash, %
  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
  100.0

Ameresco, Inc. (Ameresco) is a provider of a range of energy services, including energy efficiency, infrastructure upgrades, energy security and resilience, asset sustainability and renewable energy solutions for businesses and organizations throughout North America and Europe. Ameresco's sustainability services include capital and operational upgrades to a facility's energy infrastructure and the development, construction, ownership and operation of renewable energy plants. Its segments include U.S. Regions, U.S. Federal, Canada, Small-Scale Infrastructure and All Other. Its U.S. Regions, U.S. Federal and Canada segments offer energy efficiency products and services. Its Small-Scale Infrastructure segment sells electricity, processed renewable gas fuel, heat or cooling, produced from renewable sources of energy and generated by small-scale plants that it owns. The All Other segment offers enterprise energy management services, consulting services and integrated-photovoltaic (PV).

FINANCIAL RATIOS  of  Ameresco, Inc. (AMRC)

Valuation Ratios
P/E Ratio 58.1
Price to Sales 1.1
Price to Book 2.4
Price to Tangible Book
Price to Cash Flow -12
Price to Free Cash Flow -5.2
Growth Rates
Sales Growth Rate 3.2%
Sales - 3 Yr. Growth Rate %
EPS Growth Rate %
EPS - 3 Yr. Growth Rate %
Capital Spending Gr. Rate 43.4%
Cap. Spend. - 3 Yr. Gr. Rate 23%
Financial Strength
Quick Ratio 1
Current Ratio 0.4
LT Debt to Equity 48%
Total Debt to Equity 54.4%
Interest Coverage 3
Management Effectiveness
Return On Assets 2.3%
Ret/ On Assets - 3 Yr. Avg. 2.3%
Return On Total Capital 2.8%
Ret/ On T. Cap. - 3 Yr. Avg. 1.9%
Return On Equity 4.1%
Return On Equity - 3 Yr. Avg. 2.7%
Asset Turnover 0.9
Profitability Ratios
Gross Margin 20.6%
Gross Margin - 3 Yr. Avg. 19.6%
EBITDA Margin 7.2%
EBITDA Margin - 3 Yr. Avg. 6%
Operating Margin 3.7%
Oper. Margin - 3 Yr. Avg. 2.3%
Pre-Tax Margin 2.5%
Pre-Tax Margin - 3 Yr. Avg. 1.2%
Net Profit Margin 1.8%
Net Profit Margin - 3 Yr. Avg. 1.2%
Effective Tax Rate 25%
Eff/ Tax Rate - 3 Yr. Avg. -13.9%
Payout Ratio 0%

AMRC stock valuation input parameters

Revenue. Company's revenue (or sales) is always the starting point of any cash flow forecast. In the AMRC stock intrinsic value calculation we used $787 million for the last fiscal year's total revenue generated by Ameresco, Inc.. The default revenue input number comes from 0001 income statement of Ameresco, Inc.. 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 AMRC stock valuation model: a) initial revenue growth rate of 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 7.4%, whose default value for AMRC is calculated based on our internal credit rating of Ameresco, Inc., 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 Ameresco, Inc..
    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 AMRC stock the variable cost ratio is equal to 68%.

Fixed operating expenses is just that - expenses that are not dependant on the volume of production. They are set to $198 million in the base year in the intrinsic value calculation for AMRC 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 Ameresco, Inc..

Corporate tax rate of 27% is the nominal tax rate for Ameresco, Inc.. 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 AMRC 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 AMRC are equal to 4.6%.

Life of production assets of 2.1 years is the average useful life of capital assets used in Ameresco, Inc. 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 AMRC is equal to 4.7%. 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 - $376.875 million for Ameresco, Inc. - 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 46.300 million for Ameresco, Inc. 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 Ameresco, Inc. at the current share price and the inputted number of shares is $0.7 billion.

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