Intrinsic value of Ardmore Shipping Corporation - ASC

Previous Close

$8.62

  Intrinsic Value

$2.62

stock screener

  Rating & Target

str. sell

-70%

Previous close

$8.62

 
Intrinsic value

$2.62

 
Up/down potential

-70%

 
Rating

str. sell

We calculate the intrinsic value of ASC 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 0.3

 

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, %
  7.30
  7.07
  6.86
  6.68
  6.51
  6.36
  6.22
  6.10
  5.99
  5.89
  5.80
  5.72
  5.65
  5.58
  5.53
  5.47
  5.43
  5.38
  5.35
  5.31
  5.28
  5.25
  5.23
  5.20
  5.18
  5.17
  5.15
  5.13
  5.12
  5.11
Revenue, $m
  225
  241
  258
  275
  293
  312
  331
  351
  372
  394
  417
  441
  466
  492
  519
  547
  577
  608
  641
  675
  710
  747
  787
  827
  870
  915
  962
  1,012
  1,064
  1,118
Variable operating expenses, $m
  216
  231
  247
  263
  280
  298
  317
  336
  356
  377
  399
  422
  446
  471
  497
  524
  552
  582
  613
  646
  680
  715
  753
  792
  833
  876
  921
  968
  1,018
  1,070
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
  216
  231
  247
  263
  280
  298
  317
  336
  356
  377
  399
  422
  446
  471
  497
  524
  552
  582
  613
  646
  680
  715
  753
  792
  833
  876
  921
  968
  1,018
  1,070
Operating income, $m
  10
  10
  11
  12
  13
  13
  14
  15
  16
  17
  18
  19
  20
  21
  22
  24
  25
  26
  28
  29
  31
  32
  34
  36
  37
  39
  41
  44
  46
  48
EBITDA, $m
  47
  51
  54
  58
  62
  65
  69
  74
  78
  83
  88
  93
  98
  103
  109
  115
  121
  128
  135
  142
  149
  157
  165
  174
  183
  192
  202
  212
  223
  235
Interest expense (income), $m
  13
  28
  30
  32
  35
  37
  39
  42
  44
  47
  50
  53
  56
  59
  62
  66
  70
  73
  77
  81
  86
  90
  95
  100
  105
  111
  116
  122
  129
  135
  142
Earnings before tax, $m
  -19
  -20
  -21
  -23
  -24
  -26
  -28
  -29
  -31
  -33
  -35
  -37
  -39
  -41
  -44
  -46
  -48
  -51
  -54
  -57
  -60
  -63
  -66
  -70
  -73
  -77
  -81
  -85
  -90
  -94
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
  -19
  -20
  -21
  -23
  -24
  -26
  -28
  -29
  -31
  -33
  -35
  -37
  -39
  -41
  -44
  -46
  -48
  -51
  -54
  -57
  -60
  -63
  -66
  -70
  -73
  -77
  -81
  -85
  -90
  -94

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
  873
  935
  999
  1,066
  1,135
  1,208
  1,283
  1,361
  1,443
  1,527
  1,616
  1,709
  1,805
  1,906
  2,011
  2,121
  2,236
  2,357
  2,483
  2,615
  2,753
  2,897
  3,049
  3,207
  3,374
  3,548
  3,731
  3,922
  4,123
  4,333
Adjusted assets (=assets-cash), $m
  873
  935
  999
  1,066
  1,135
  1,208
  1,283
  1,361
  1,443
  1,527
  1,616
  1,709
  1,805
  1,906
  2,011
  2,121
  2,236
  2,357
  2,483
  2,615
  2,753
  2,897
  3,049
  3,207
  3,374
  3,548
  3,731
  3,922
  4,123
  4,333
Revenue / Adjusted assets
  0.258
  0.258
  0.258
  0.258
  0.258
  0.258
  0.258
  0.258
  0.258
  0.258
  0.258
  0.258
  0.258
  0.258
  0.258
  0.258
  0.258
  0.258
  0.258
  0.258
  0.258
  0.258
  0.258
  0.258
  0.258
  0.258
  0.258
  0.258
  0.258
  0.258
Average production assets, $m
  801
  858
  917
  978
  1,042
  1,108
  1,177
  1,249
  1,324
  1,402
  1,483
  1,568
  1,657
  1,749
  1,846
  1,947
  2,052
  2,163
  2,278
  2,399
  2,526
  2,659
  2,798
  2,943
  3,096
  3,256
  3,424
  3,599
  3,784
  3,977
Working capital, $m
  28
  30
  32
  34
  37
  39
  41
  44
  47
  49
  52
  55
  58
  61
  65
  68
  72
  76
  80
  84
  89
  93
  98
  103
  109
  114
  120
  126
  133
  140
Total debt, $m
  505
  541
  578
  616
  656
  697
  740
  785
  832
  881
  932
  985
  1,040
  1,098
  1,159
  1,222
  1,288
  1,357
  1,429
  1,505
  1,584
  1,667
  1,754
  1,845
  1,941
  2,041
  2,145
  2,255
  2,371
  2,492
Total liabilities, $m
  501
  537
  574
  612
  652
  693
  736
  781
  828
  877
  928
  981
  1,036
  1,094
  1,154
  1,218
  1,284
  1,353
  1,425
  1,501
  1,580
  1,663
  1,750
  1,841
  1,936
  2,036
  2,141
  2,251
  2,367
  2,487
Total equity, $m
  372
  398
  426
  454
  484
  514
  546
  580
  615
  651
  688
  728
  769
  812
  857
  904
  953
  1,004
  1,058
  1,114
  1,173
  1,234
  1,299
  1,366
  1,437
  1,511
  1,589
  1,671
  1,756
  1,846
Total liabilities and equity, $m
  873
  935
  1,000
  1,066
  1,136
  1,207
  1,282
  1,361
  1,443
  1,528
  1,616
  1,709
  1,805
  1,906
  2,011
  2,122
  2,237
  2,357
  2,483
  2,615
  2,753
  2,897
  3,049
  3,207
  3,373
  3,547
  3,730
  3,922
  4,123
  4,333
Debt-to-equity ratio
  1.360
  1.360
  1.360
  1.360
  1.360
  1.360
  1.360
  1.350
  1.350
  1.350
  1.350
  1.350
  1.350
  1.350
  1.350
  1.350
  1.350
  1.350
  1.350
  1.350
  1.350
  1.350
  1.350
  1.350
  1.350
  1.350
  1.350
  1.350
  1.350
  1.350
Adjusted equity ratio
  0.426
  0.426
  0.426
  0.426
  0.426
  0.426
  0.426
  0.426
  0.426
  0.426
  0.426
  0.426
  0.426
  0.426
  0.426
  0.426
  0.426
  0.426
  0.426
  0.426
  0.426
  0.426
  0.426
  0.426
  0.426
  0.426
  0.426
  0.426
  0.426
  0.426

CASH FLOW

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Net income, $m
  -19
  -20
  -21
  -23
  -24
  -26
  -28
  -29
  -31
  -33
  -35
  -37
  -39
  -41
  -44
  -46
  -48
  -51
  -54
  -57
  -60
  -63
  -66
  -70
  -73
  -77
  -81
  -85
  -90
  -94
Depreciation, amort., depletion, $m
  38
  40
  43
  46
  49
  52
  55
  59
  62
  66
  70
  74
  78
  82
  87
  91
  96
  102
  107
  113
  119
  125
  131
  138
  145
  153
  161
  169
  178
  187
Funds from operations, $m
  19
  20
  22
  23
  25
  26
  28
  29
  31
  33
  35
  37
  39
  41
  43
  45
  48
  50
  53
  56
  59
  62
  65
  69
  72
  76
  80
  84
  88
  93
Change in working capital, $m
  2
  2
  2
  2
  2
  2
  2
  3
  3
  3
  3
  3
  3
  3
  3
  4
  4
  4
  4
  4
  4
  5
  5
  5
  5
  6
  6
  6
  6
  7
Cash from operations, $m
  17
  18
  20
  21
  22
  24
  25
  27
  28
  30
  32
  34
  36
  38
  40
  42
  44
  47
  49
  52
  54
  57
  60
  63
  67
  70
  74
  78
  82
  86
Maintenance CAPEX, $m
  -35
  -38
  -40
  -43
  -46
  -49
  -52
  -55
  -59
  -62
  -66
  -70
  -74
  -78
  -82
  -87
  -91
  -96
  -102
  -107
  -113
  -119
  -125
  -131
  -138
  -145
  -153
  -161
  -169
  -178
New CAPEX, $m
  -54
  -57
  -59
  -61
  -64
  -66
  -69
  -72
  -75
  -78
  -81
  -85
  -89
  -93
  -97
  -101
  -106
  -110
  -116
  -121
  -127
  -133
  -139
  -146
  -153
  -160
  -168
  -176
  -184
  -193
Cash from investing activities, $m
  -89
  -95
  -99
  -104
  -110
  -115
  -121
  -127
  -134
  -140
  -147
  -155
  -163
  -171
  -179
  -188
  -197
  -206
  -218
  -228
  -240
  -252
  -264
  -277
  -291
  -305
  -321
  -337
  -353
  -371
Free cash flow, $m
  -72
  -76
  -80
  -83
  -87
  -91
  -96
  -100
  -105
  -110
  -115
  -121
  -127
  -133
  -139
  -146
  -153
  -160
  -168
  -176
  -185
  -194
  -204
  -214
  -224
  -235
  -247
  -259
  -272
  -285
Issuance/(repayment) of debt, $m
  34
  35
  37
  38
  40
  41
  43
  45
  47
  49
  51
  53
  55
  58
  60
  63
  66
  69
  72
  76
  79
  83
  87
  91
  95
  100
  105
  110
  115
  121
Issuance/(repurchase) of shares, $m
  44
  46
  49
  51
  54
  57
  60
  63
  66
  69
  73
  76
  80
  84
  88
  93
  98
  102
  108
  113
  119
  124
  131
  137
  144
  151
  159
  167
  175
  184
Cash from financing (excl. dividends), $m  
  78
  81
  86
  89
  94
  98
  103
  108
  113
  118
  124
  129
  135
  142
  148
  156
  164
  171
  180
  189
  198
  207
  218
  228
  239
  251
  264
  277
  290
  305
Total cash flow (excl. dividends), $m
  5
  6
  6
  6
  6
  7
  7
  7
  8
  8
  8
  9
  9
  9
  10
  10
  11
  11
  12
  12
  13
  13
  14
  15
  15
  16
  17
  18
  19
  20
Retained Cash Flow (-), $m
  -44
  -46
  -49
  -51
  -54
  -57
  -60
  -63
  -66
  -69
  -73
  -76
  -80
  -84
  -88
  -93
  -98
  -102
  -108
  -113
  -119
  -124
  -131
  -137
  -144
  -151
  -159
  -167
  -175
  -184
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
  -39
  -41
  -43
  -45
  -47
  -50
  -53
  -55
  -58
  -61
  -64
  -68
  -71
  -75
  -79
  -83
  -87
  -91
  -96
  -101
  -106
  -111
  -117
  -122
  -129
  -135
  -142
  -149
  -156
  -164
Discount rate, %
  9.40
  9.87
  10.36
  10.88
  11.43
  12.00
  12.60
  13.23
  13.89
  14.58
  15.31
  16.08
  16.88
  17.73
  18.61
  19.54
  20.52
  21.54
  22.62
  23.75
  24.94
  26.19
  27.50
  28.87
  30.32
  31.83
  33.42
  35.09
  36.85
  38.69
PV of cash for distribution, $m
  -35
  -34
  -32
  -30
  -28
  -25
  -23
  -20
  -18
  -16
  -13
  -11
  -9
  -8
  -6
  -5
  -4
  -3
  -2
  -1
  -1
  -1
  0
  0
  0
  0
  0
  0
  0
  0
Current shareholders' claim on cash, %
  86.6
  75.2
  65.5
  57.2
  50.0
  43.7
  38.3
  33.6
  29.6
  26.0
  22.9
  20.2
  17.8
  15.7
  13.9
  12.3
  10.8
  9.6
  8.5
  7.5
  6.6
  5.9
  5.2
  4.6
  4.1
  3.6
  3.2
  2.9
  2.5
  2.2

Ardmore Shipping Corporation provides seaborne transportation of petroleum products and chemicals to national oil companies, oil and chemical traders, and chemical companies, with its fleet of mid-size product and chemical tankers. The Company's segment relates to the operations of its vessels. The Company's fleet consists of over 20 double-hulled product and chemical tankers, all of which are in operation. The Company's vessels include Ardmore Seavaliant, Ardmore Seaventure, Ardmore Seavantage, Ardmore Seavanguard, Ardmore Sealion, Ardmore Seafox, Ardmore Seahawk, Ardmore Endeavour, Ardmore Seafarer, Ardmore Seatrader, Ardmore Seamaster and Ardmore Sealeader. The Company has over 30 subsidiaries, the majority of which represent single ship-owning companies for its fleet. Its subsidiaries include Ardmore Shipping (Bermuda) Limited (ASBL), Ardmore Shipping Services (Ireland) Limited (ASSIL), Ardmore Shipping (Asia) Pte. Limited and Ardmore Shipping (Americas) LLC.

FINANCIAL RATIOS  of  Ardmore Shipping Corporation (ASC)

Valuation Ratios
P/E Ratio 71.3
Price to Sales 1.7
Price to Book 0.7
Price to Tangible Book
Price to Cash Flow 6.6
Price to Free Cash Flow -2.2
Growth Rates
Sales Growth Rate 3.8%
Sales - 3 Yr. Growth Rate %
EPS Growth Rate %
EPS - 3 Yr. Growth Rate %
Capital Spending Gr. Rate -25.3%
Cap. Spend. - 3 Yr. Gr. Rate 3.7%
Financial Strength
Quick Ratio 1
Current Ratio 0.1
LT Debt to Equity 104%
Total Debt to Equity 114.4%
Interest Coverage 1
Management Effectiveness
Return On Assets 2%
Ret/ On Assets - 3 Yr. Avg. 3.5%
Return On Total Capital 0.5%
Ret/ On T. Cap. - 3 Yr. Avg. 1.9%
Return On Equity 1.1%
Return On Equity - 3 Yr. Avg. 3.8%
Asset Turnover 0.2
Profitability Ratios
Gross Margin 43.3%
Gross Margin - 3 Yr. Avg. 46.9%
EBITDA Margin 28.7%
EBITDA Margin - 3 Yr. Avg. 35.6%
Operating Margin 14.6%
Oper. Margin - 3 Yr. Avg. 16.6%
Pre-Tax Margin 2.4%
Pre-Tax Margin - 3 Yr. Avg. 8.6%
Net Profit Margin 2.4%
Net Profit Margin - 3 Yr. Avg. 8.6%
Effective Tax Rate 0%
Eff/ Tax Rate - 3 Yr. Avg. 0%
Payout Ratio 225%

ASC stock valuation input parameters

Revenue. Company's revenue (or sales) is always the starting point of any cash flow forecast. In the ASC stock intrinsic value calculation we used $210 million for the last fiscal year's total revenue generated by Ardmore Shipping Corporation. The default revenue input number comes from 0001 income statement of Ardmore Shipping Corporation. 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 ASC stock valuation model: a) initial revenue growth rate of 7.3% 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 9.4%, whose default value for ASC is calculated based on our internal credit rating of Ardmore Shipping Corporation, 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 Ardmore Shipping Corporation.
    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 ASC stock the variable cost ratio is equal to 95.7%.

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 ASC 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 6% for Ardmore Shipping Corporation.

Corporate tax rate of 27% is the nominal tax rate for Ardmore Shipping Corporation. 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 ASC 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 ASC are equal to 355.7%.

Life of production assets of 21.3 years is the average useful life of capital assets used in Ardmore Shipping Corporation 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 ASC is equal to 12.5%. 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 - $346.583934 million for Ardmore Shipping Corporation - 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 33.098 million for Ardmore Shipping Corporation 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 Ardmore Shipping Corporation at the current share price and the inputted number of shares is $0.3 billion.

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