Intrinsic value of Aqua Metals, Inc. - AQMS

Previous Close

$1.57

  Intrinsic Value

$0.02

stock screener

  Rating & Target

str. sell

-99%

Previous close

$1.57

 
Intrinsic value

$0.02

 
Up/down potential

-99%

 
Rating

str. sell

We calculate the intrinsic value of AQMS 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 0.1

 

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, %
  19.50
  18.05
  16.75
  15.57
  14.51
  13.56
  12.71
  11.94
  11.24
  10.62
  10.06
  9.55
  9.10
  8.69
  8.32
  7.99
  7.69
  7.42
  7.18
  6.96
  6.76
  6.59
  6.43
  6.29
  6.16
  6.04
  5.94
  5.84
  5.76
  5.68
Revenue, $m
  5
  6
  7
  8
  9
  10
  11
  12
  14
  15
  17
  19
  20
  22
  24
  26
  28
  30
  32
  34
  36
  39
  41
  44
  47
  49
  52
  55
  59
  62
Variable operating expenses, $m
  35
  40
  46
  53
  60
  67
  75
  84
  93
  102
  107
  118
  128
  140
  151
  163
  176
  189
  202
  216
  231
  246
  262
  279
  296
  314
  332
  352
  372
  393
Fixed operating expenses, $m
  11
  11
  12
  12
  12
  13
  13
  13
  13
  14
  14
  14
  15
  15
  15
  16
  16
  16
  17
  17
  17
  18
  18
  19
  19
  19
  20
  20
  21
  21
Total operating expenses, $m
  46
  51
  58
  65
  72
  80
  88
  97
  106
  116
  121
  132
  143
  155
  166
  179
  192
  205
  219
  233
  248
  264
  280
  298
  315
  333
  352
  372
  393
  414
Operating income, $m
  -41
  -46
  -52
  -57
  -64
  -70
  -77
  -85
  -92
  -101
  -104
  -113
  -123
  -132
  -143
  -153
  -164
  -175
  -187
  -199
  -212
  -225
  -239
  -253
  -268
  -284
  -300
  -316
  -334
  -352
EBITDA, $m
  -33
  -37
  -42
  -47
  -52
  -58
  -64
  -70
  -77
  -84
  -91
  -99
  -107
  -115
  -124
  -133
  -142
  -152
  -162
  -172
  -183
  -194
  -206
  -218
  -231
  -244
  -258
  -273
  -288
  -303
Interest expense (income), $m
  0
  4
  5
  6
  7
  8
  10
  11
  13
  14
  16
  18
  20
  22
  24
  26
  28
  31
  33
  36
  38
  41
  44
  47
  50
  53
  57
  60
  64
  68
  71
Earnings before tax, $m
  -45
  -51
  -57
  -64
  -72
  -80
  -88
  -97
  -107
  -117
  -122
  -133
  -145
  -156
  -169
  -181
  -195
  -208
  -223
  -238
  -253
  -269
  -286
  -303
  -321
  -340
  -360
  -380
  -401
  -424
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
  -45
  -51
  -57
  -64
  -72
  -80
  -88
  -97
  -107
  -117
  -122
  -133
  -145
  -156
  -169
  -181
  -195
  -208
  -223
  -238
  -253
  -269
  -286
  -303
  -321
  -340
  -360
  -380
  -401
  -424

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
  69
  82
  95
  110
  126
  143
  162
  181
  201
  223
  245
  269
  293
  318
  345
  372
  401
  431
  462
  494
  527
  562
  598
  636
  675
  716
  758
  802
  849
  897
Adjusted assets (=assets-cash), $m
  69
  82
  95
  110
  126
  143
  162
  181
  201
  223
  245
  269
  293
  318
  345
  372
  401
  431
  462
  494
  527
  562
  598
  636
  675
  716
  758
  802
  849
  897
Revenue / Adjusted assets
  0.072
  0.073
  0.074
  0.073
  0.071
  0.070
  0.068
  0.066
  0.070
  0.067
  0.069
  0.071
  0.068
  0.069
  0.070
  0.070
  0.070
  0.070
  0.069
  0.069
  0.068
  0.069
  0.069
  0.069
  0.070
  0.068
  0.069
  0.069
  0.069
  0.069
Average production assets, $m
  55
  65
  76
  88
  101
  115
  129
  145
  161
  178
  196
  215
  234
  254
  276
  298
  321
  344
  369
  395
  421
  449
  478
  508
  539
  572
  606
  641
  678
  717
Working capital, $m
  -7
  -8
  -9
  -11
  -12
  -14
  -15
  -17
  -19
  -21
  -23
  -26
  -28
  -30
  -33
  -36
  -38
  -41
  -44
  -47
  -51
  -54
  -57
  -61
  -65
  -69
  -73
  -77
  -81
  -86
Total debt, $m
  16
  20
  24
  28
  33
  38
  43
  49
  55
  61
  68
  75
  82
  89
  97
  105
  113
  122
  131
  140
  150
  160
  171
  182
  193
  205
  217
  230
  244
  258
Total liabilities, $m
  20
  24
  28
  32
  37
  42
  47
  53
  59
  65
  72
  78
  86
  93
  101
  109
  117
  126
  135
  144
  154
  164
  175
  186
  197
  209
  221
  234
  248
  262
Total equity, $m
  49
  58
  68
  78
  89
  102
  114
  128
  143
  158
  174
  190
  207
  225
  244
  264
  284
  305
  327
  350
  373
  398
  424
  450
  478
  507
  537
  568
  601
  635
Total liabilities and equity, $m
  69
  82
  96
  110
  126
  144
  161
  181
  202
  223
  246
  268
  293
  318
  345
  373
  401
  431
  462
  494
  527
  562
  599
  636
  675
  716
  758
  802
  849
  897
Debt-to-equity ratio
  0.330
  0.340
  0.350
  0.360
  0.370
  0.370
  0.380
  0.380
  0.390
  0.390
  0.390
  0.390
  0.390
  0.400
  0.400
  0.400
  0.400
  0.400
  0.400
  0.400
  0.400
  0.400
  0.400
  0.400
  0.400
  0.400
  0.410
  0.410
  0.410
  0.410
Adjusted equity ratio
  0.708
  0.708
  0.708
  0.708
  0.708
  0.708
  0.708
  0.708
  0.708
  0.708
  0.708
  0.708
  0.708
  0.708
  0.708
  0.708
  0.708
  0.708
  0.708
  0.708
  0.708
  0.708
  0.708
  0.708
  0.708
  0.708
  0.708
  0.708
  0.708
  0.708

CASH FLOW

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Net income, $m
  -45
  -51
  -57
  -64
  -72
  -80
  -88
  -97
  -107
  -117
  -122
  -133
  -145
  -156
  -169
  -181
  -195
  -208
  -223
  -238
  -253
  -269
  -286
  -303
  -321
  -340
  -360
  -380
  -401
  -424
Depreciation, amort., depletion, $m
  8
  9
  10
  11
  12
  12
  13
  15
  16
  17
  13
  15
  16
  17
  19
  20
  22
  24
  25
  27
  29
  31
  33
  35
  37
  39
  41
  44
  46
  49
Funds from operations, $m
  -37
  -42
  -48
  -54
  -60
  -67
  -75
  -83
  -91
  -100
  -109
  -119
  -129
  -139
  -150
  -161
  -173
  -185
  -198
  -211
  -224
  -238
  -253
  -268
  -284
  -301
  -318
  -336
  -355
  -375
Change in working capital, $m
  -1
  -1
  -1
  -1
  -2
  -2
  -2
  -2
  -2
  -2
  -2
  -2
  -2
  -2
  -3
  -3
  -3
  -3
  -3
  -3
  -3
  -3
  -3
  -4
  -4
  -4
  -4
  -4
  -4
  -5
Cash from operations, $m
  -36
  -41
  -46
  -52
  -59
  -66
  -73
  -81
  -89
  -98
  -107
  -116
  -126
  -137
  -147
  -158
  -170
  -182
  -195
  -208
  -221
  -235
  -250
  -265
  -281
  -297
  -314
  -332
  -351
  -370
Maintenance CAPEX, $m
  -3
  -4
  -4
  -5
  -6
  -7
  -8
  -9
  -10
  -11
  -12
  -13
  -15
  -16
  -17
  -19
  -20
  -22
  -24
  -25
  -27
  -29
  -31
  -33
  -35
  -37
  -39
  -41
  -44
  -46
New CAPEX, $m
  -9
  -10
  -11
  -12
  -13
  -14
  -15
  -15
  -16
  -17
  -18
  -19
  -20
  -20
  -21
  -22
  -23
  -24
  -25
  -26
  -27
  -28
  -29
  -30
  -31
  -33
  -34
  -35
  -37
  -39
Cash from investing activities, $m
  -12
  -14
  -15
  -17
  -19
  -21
  -23
  -24
  -26
  -28
  -30
  -32
  -35
  -36
  -38
  -41
  -43
  -46
  -49
  -51
  -54
  -57
  -60
  -63
  -66
  -70
  -73
  -76
  -81
  -85
Free cash flow, $m
  -48
  -55
  -62
  -69
  -78
  -86
  -95
  -105
  -115
  -126
  -137
  -148
  -160
  -173
  -186
  -199
  -213
  -228
  -243
  -259
  -275
  -292
  -309
  -328
  -347
  -367
  -387
  -409
  -431
  -455
Issuance/(repayment) of debt, $m
  3
  4
  4
  4
  5
  5
  5
  6
  6
  6
  7
  7
  7
  7
  8
  8
  8
  9
  9
  9
  10
  10
  11
  11
  11
  12
  12
  13
  13
  14
Issuance/(repurchase) of shares, $m
  53
  60
  67
  75
  83
  92
  101
  111
  121
  132
  138
  150
  162
  174
  187
  201
  215
  230
  245
  260
  277
  294
  311
  330
  349
  369
  390
  412
  434
  458
Cash from financing (excl. dividends), $m  
  56
  64
  71
  79
  88
  97
  106
  117
  127
  138
  145
  157
  169
  181
  195
  209
  223
  239
  254
  269
  287
  304
  322
  341
  360
  381
  402
  425
  447
  472
Total cash flow (excl. dividends), $m
  9
  9
  9
  10
  10
  11
  11
  11
  12
  12
  8
  8
  9
  9
  9
  10
  10
  10
  11
  11
  12
  12
  13
  13
  14
  14
  15
  16
  16
  17
Retained Cash Flow (-), $m
  -53
  -60
  -67
  -75
  -83
  -92
  -101
  -111
  -121
  -132
  -138
  -150
  -162
  -174
  -187
  -201
  -215
  -230
  -245
  -260
  -277
  -294
  -311
  -330
  -349
  -369
  -390
  -412
  -434
  -458
Prev. year cash balance distribution, $m
  9
  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
  -36
  -51
  -58
  -65
  -73
  -81
  -90
  -99
  -109
  -120
  -130
  -142
  -153
  -165
  -178
  -191
  -205
  -219
  -234
  -249
  -265
  -282
  -299
  -317
  -335
  -355
  -375
  -396
  -418
  -441
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
  -34
  -47
  -50
  -54
  -57
  -59
  -61
  -62
  -63
  -63
  -62
  -60
  -58
  -56
  -52
  -49
  -45
  -40
  -36
  -32
  -27
  -23
  -20
  -16
  -13
  -10
  -8
  -6
  -5
  -3
Current shareholders' claim on cash, %
  51.7
  27.5
  15.0
  8.4
  4.7
  2.7
  1.6
  0.9
  0.6
  0.3
  0.2
  0.1
  0.1
  0.0
  0.0
  0.0
  0.0
  0.0
  0.0
  0.0
  0.0
  0.0
  0.0
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Aqua Metals, Inc. is engaged in the business of recycling lead through a process that the Company developed and named AquaRefining. The Company's AquaRefining process focuses on providing for the recycling of lead acid batteries (LABs) and the production of lead. AquaRefining uses bio-degradable aqueous solvent and an ambient temperature electro-chemical process to produce lead. The modular nature of AquaRefining makes it possible to start LAB recycling at a much smaller scale than is possible with smelters. Its AquaRefining process begins with the crushing of used LABs and the separation of the metallic lead, active material (lead compounds), sulfuric acid and plastic for recycling. The active material is dissolved in its solvent. The primary lead is then stripped from the solvent using its automated process allowing the solvent to be reused continuously and indefinitely. As of December 31, 2016, the Company had not generated revenues.

FINANCIAL RATIOS  of  Aqua Metals, Inc. (AQMS)

Valuation Ratios
P/E Ratio -2
Price to Sales 0
Price to Book 0.5
Price to Tangible Book
Price to Cash Flow -2.6
Price to Free Cash Flow -0.7
Growth Rates
Sales Growth Rate -100%
Sales - 3 Yr. Growth Rate %
EPS Growth Rate %
EPS - 3 Yr. Growth Rate %
Capital Spending Gr. Rate 125%
Cap. Spend. - 3 Yr. Gr. Rate NaN%
Financial Strength
Quick Ratio NaN
Current Ratio 0.3
LT Debt to Equity 17.5%
Total Debt to Equity 17.5%
Interest Coverage 0
Management Effectiveness
Return On Assets -23.5%
Ret/ On Assets - 3 Yr. Avg. -45.2%
Return On Total Capital -25.5%
Ret/ On T. Cap. - 3 Yr. Avg. -58.8%
Return On Equity -30.8%
Return On Equity - 3 Yr. Avg. 98.8%
Asset Turnover 0
Profitability Ratios
Gross Margin 0%
Gross Margin - 3 Yr. Avg. 0%
EBITDA Margin 0%
EBITDA Margin - 3 Yr. Avg. 0%
Operating Margin 0%
Oper. Margin - 3 Yr. Avg. 0%
Pre-Tax Margin 0%
Pre-Tax Margin - 3 Yr. Avg. 0%
Net Profit Margin 0%
Net Profit Margin - 3 Yr. Avg. 0%
Effective Tax Rate 0%
Eff/ Tax Rate - 3 Yr. Avg. 11.1%
Payout Ratio 0%

AQMS stock valuation input parameters

Revenue. Company's revenue (or sales) is always the starting point of any cash flow forecast. In the AQMS stock intrinsic value calculation we used $4 million for the last fiscal year's total revenue generated by Aqua Metals, Inc.. The default revenue input number comes from 0001 income statement of Aqua Metals, 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 AQMS stock valuation model: a) initial revenue growth rate of 19.5% 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 AQMS is calculated based on our internal credit rating of Aqua Metals, 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 Aqua Metals, 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 AQMS stock the variable cost ratio is equal to 750%.

Fixed operating expenses is just that - expenses that are not dependant on the volume of production. They are set to $11 million in the base year in the intrinsic value calculation for AQMS 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 29.3% for Aqua Metals, Inc..

Corporate tax rate of 27% is the nominal tax rate for Aqua Metals, 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 AQMS 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 AQMS are equal to 1158.1%.

Life of production assets of 14.6 years is the average useful life of capital assets used in Aqua Metals, 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 AQMS is equal to -138.8%. 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 - $50.09 million for Aqua Metals, 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 44.359 million for Aqua Metals, 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 Aqua Metals, Inc. at the current share price and the inputted number of shares is $0.1 billion.

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