Intrinsic value of Atlantic Power - AT

Previous Close

$2.15

  Intrinsic Value

$0.00

stock screener

  Rating & Target

str. sell

-100%

Previous close

$2.15

 
Intrinsic value

$0.00

 
Up/down potential

-100%

 
Rating

str. sell

We calculate the intrinsic value of AT 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, %
  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
  440
  450
  461
  474
  489
  504
  522
  540
  560
  582
  605
  629
  655
  683
  713
  744
  777
  812
  849
  888
  929
  972
  1,018
  1,066
  1,117
  1,171
  1,227
  1,286
  1,348
  1,414
Variable operating expenses, $m
  525
  537
  550
  565
  581
  599
  619
  640
  663
  688
  693
  721
  751
  783
  816
  852
  890
  930
  973
  1,017
  1,064
  1,114
  1,166
  1,222
  1,280
  1,341
  1,406
  1,473
  1,545
  1,620
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
  525
  537
  550
  565
  581
  599
  619
  640
  663
  688
  693
  721
  751
  783
  816
  852
  890
  930
  973
  1,017
  1,064
  1,114
  1,166
  1,222
  1,280
  1,341
  1,406
  1,473
  1,545
  1,620
Operating income, $m
  -85
  -87
  -88
  -90
  -92
  -95
  -97
  -100
  -103
  -106
  -88
  -92
  -95
  -100
  -104
  -108
  -113
  -118
  -124
  -129
  -135
  -142
  -148
  -155
  -163
  -171
  -179
  -187
  -196
  -206
EBITDA, $m
  36
  36
  37
  38
  40
  41
  42
  44
  45
  47
  49
  51
  53
  55
  58
  60
  63
  66
  69
  72
  75
  79
  82
  86
  90
  95
  99
  104
  109
  114
Interest expense (income), $m
  71
  76
  66
  68
  70
  73
  76
  79
  83
  87
  91
  96
  101
  106
  111
  117
  124
  130
  137
  145
  153
  161
  170
  179
  189
  199
  210
  221
  233
  246
  259
Earnings before tax, $m
  -161
  -152
  -156
  -161
  -165
  -171
  -177
  -183
  -190
  -197
  -184
  -192
  -201
  -211
  -221
  -232
  -244
  -256
  -268
  -282
  -296
  -311
  -327
  -344
  -362
  -380
  -400
  -420
  -442
  -465
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
  -161
  -152
  -156
  -161
  -165
  -171
  -177
  -183
  -190
  -197
  -184
  -192
  -201
  -211
  -221
  -232
  -244
  -256
  -268
  -282
  -296
  -311
  -327
  -344
  -362
  -380
  -400
  -420
  -442
  -465

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
  1,130
  1,156
  1,186
  1,219
  1,256
  1,297
  1,341
  1,389
  1,440
  1,495
  1,555
  1,618
  1,685
  1,756
  1,832
  1,912
  1,997
  2,087
  2,182
  2,282
  2,388
  2,500
  2,617
  2,741
  2,872
  3,009
  3,154
  3,306
  3,466
  3,634
Adjusted assets (=assets-cash), $m
  1,130
  1,156
  1,186
  1,219
  1,256
  1,297
  1,341
  1,389
  1,440
  1,495
  1,555
  1,618
  1,685
  1,756
  1,832
  1,912
  1,997
  2,087
  2,182
  2,282
  2,388
  2,500
  2,617
  2,741
  2,872
  3,009
  3,154
  3,306
  3,466
  3,634
Revenue / Adjusted assets
  0.389
  0.389
  0.389
  0.389
  0.389
  0.389
  0.389
  0.389
  0.389
  0.389
  0.389
  0.389
  0.389
  0.389
  0.389
  0.389
  0.389
  0.389
  0.389
  0.389
  0.389
  0.389
  0.389
  0.389
  0.389
  0.389
  0.389
  0.389
  0.389
  0.389
Average production assets, $m
  807
  826
  847
  871
  897
  926
  958
  992
  1,029
  1,068
  1,110
  1,155
  1,203
  1,254
  1,308
  1,366
  1,426
  1,491
  1,558
  1,630
  1,706
  1,785
  1,869
  1,958
  2,051
  2,149
  2,252
  2,361
  2,475
  2,596
Working capital, $m
  52
  53
  54
  56
  58
  60
  62
  64
  66
  69
  71
  74
  77
  81
  84
  88
  92
  96
  100
  105
  110
  115
  120
  126
  132
  138
  145
  152
  159
  167
Total debt, $m
  713
  736
  763
  793
  826
  863
  902
  945
  992
  1,041
  1,095
  1,151
  1,212
  1,276
  1,344
  1,417
  1,493
  1,574
  1,659
  1,750
  1,845
  1,945
  2,051
  2,163
  2,280
  2,404
  2,534
  2,671
  2,815
  2,967
Total liabilities, $m
  1,017
  1,041
  1,067
  1,097
  1,131
  1,167
  1,207
  1,250
  1,296
  1,346
  1,399
  1,456
  1,516
  1,581
  1,649
  1,721
  1,798
  1,878
  1,964
  2,054
  2,149
  2,250
  2,356
  2,467
  2,585
  2,708
  2,838
  2,975
  3,119
  3,271
Total equity, $m
  113
  116
  119
  122
  126
  130
  134
  139
  144
  150
  155
  162
  168
  176
  183
  191
  200
  209
  218
  228
  239
  250
  262
  274
  287
  301
  315
  331
  347
  363
Total liabilities and equity, $m
  1,130
  1,157
  1,186
  1,219
  1,257
  1,297
  1,341
  1,389
  1,440
  1,496
  1,554
  1,618
  1,684
  1,757
  1,832
  1,912
  1,998
  2,087
  2,182
  2,282
  2,388
  2,500
  2,618
  2,741
  2,872
  3,009
  3,153
  3,306
  3,466
  3,634
Debt-to-equity ratio
  6.310
  6.370
  6.430
  6.500
  6.580
  6.650
  6.730
  6.810
  6.890
  6.960
  7.040
  7.120
  7.190
  7.270
  7.340
  7.410
  7.480
  7.540
  7.600
  7.670
  7.720
  7.780
  7.840
  7.890
  7.940
  7.990
  8.030
  8.080
  8.120
  8.160
Adjusted equity ratio
  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
  0.100

CASH FLOW

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Net income, $m
  -161
  -152
  -156
  -161
  -165
  -171
  -177
  -183
  -190
  -197
  -184
  -192
  -201
  -211
  -221
  -232
  -244
  -256
  -268
  -282
  -296
  -311
  -327
  -344
  -362
  -380
  -400
  -420
  -442
  -465
Depreciation, amort., depletion, $m
  121
  123
  126
  129
  132
  136
  139
  144
  148
  153
  137
  143
  149
  155
  162
  169
  176
  184
  192
  201
  211
  220
  231
  242
  253
  265
  278
  291
  306
  320
Funds from operations, $m
  -40
  -29
  -30
  -32
  -33
  -35
  -37
  -39
  -42
  -44
  -47
  -50
  -53
  -56
  -60
  -63
  -67
  -72
  -76
  -81
  -86
  -91
  -97
  -102
  -109
  -115
  -122
  -129
  -137
  -144
Change in working capital, $m
  1
  1
  1
  2
  2
  2
  2
  2
  2
  3
  3
  3
  3
  3
  3
  4
  4
  4
  4
  5
  5
  5
  5
  6
  6
  6
  7
  7
  7
  8
Cash from operations, $m
  -41
  -30
  -32
  -33
  -35
  -37
  -39
  -41
  -44
  -47
  -50
  -53
  -56
  -59
  -63
  -67
  -71
  -76
  -80
  -85
  -91
  -96
  -102
  -108
  -114
  -121
  -128
  -136
  -144
  -152
Maintenance CAPEX, $m
  -98
  -100
  -102
  -105
  -108
  -111
  -114
  -118
  -122
  -127
  -132
  -137
  -143
  -149
  -155
  -162
  -169
  -176
  -184
  -192
  -201
  -211
  -220
  -231
  -242
  -253
  -265
  -278
  -291
  -306
New CAPEX, $m
  -16
  -19
  -21
  -24
  -26
  -29
  -32
  -34
  -37
  -39
  -42
  -45
  -48
  -51
  -54
  -57
  -61
  -64
  -68
  -72
  -76
  -80
  -84
  -88
  -93
  -98
  -103
  -109
  -114
  -120
Cash from investing activities, $m
  -114
  -119
  -123
  -129
  -134
  -140
  -146
  -152
  -159
  -166
  -174
  -182
  -191
  -200
  -209
  -219
  -230
  -240
  -252
  -264
  -277
  -291
  -304
  -319
  -335
  -351
  -368
  -387
  -405
  -426
Free cash flow, $m
  -154
  -149
  -155
  -162
  -169
  -177
  -185
  -194
  -203
  -213
  -224
  -235
  -247
  -259
  -272
  -286
  -301
  -316
  -332
  -349
  -367
  -386
  -406
  -427
  -449
  -473
  -497
  -523
  -550
  -578
Issuance/(repayment) of debt, $m
  -109
  23
  27
  30
  33
  36
  40
  43
  46
  50
  53
  57
  60
  64
  68
  72
  76
  81
  85
  90
  95
  100
  106
  112
  117
  124
  130
  137
  144
  152
Issuance/(repurchase) of shares, $m
  292
  155
  159
  164
  169
  175
  181
  188
  195
  203
  190
  199
  208
  218
  229
  240
  252
  265
  278
  292
  307
  323
  339
  356
  375
  394
  414
  436
  458
  482
Cash from financing (excl. dividends), $m  
  183
  178
  186
  194
  202
  211
  221
  231
  241
  253
  243
  256
  268
  282
  297
  312
  328
  346
  363
  382
  402
  423
  445
  468
  492
  518
  544
  573
  602
  634
Total cash flow (excl. dividends), $m
  29
  30
  31
  32
  33
  35
  36
  37
  38
  39
  19
  21
  22
  23
  25
  26
  28
  29
  31
  33
  35
  37
  39
  41
  43
  45
  47
  50
  53
  55
Retained Cash Flow (-), $m
  -292
  -155
  -159
  -164
  -169
  -175
  -181
  -188
  -195
  -203
  -190
  -199
  -208
  -218
  -229
  -240
  -252
  -265
  -278
  -292
  -307
  -323
  -339
  -356
  -375
  -394
  -414
  -436
  -458
  -482
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
  -263
  -125
  -128
  -132
  -136
  -140
  -145
  -151
  -157
  -163
  -170
  -178
  -186
  -195
  -204
  -214
  -224
  -235
  -247
  -259
  -272
  -286
  -300
  -316
  -332
  -349
  -367
  -386
  -406
  -427
Discount rate, %
  11.60
  12.18
  12.79
  13.43
  14.10
  14.80
  15.55
  16.32
  17.14
  18.00
  18.90
  19.84
  20.83
  21.87
  22.97
  24.12
  25.32
  26.59
  27.92
  29.31
  30.78
  32.32
  33.93
  35.63
  37.41
  39.28
  41.25
  43.31
  45.47
  47.75
PV of cash for distribution, $m
  -236
  -99
  -89
  -80
  -70
  -61
  -53
  -45
  -38
  -31
  -25
  -20
  -16
  -12
  -9
  -7
  -5
  -3
  -2
  -2
  -1
  -1
  0
  0
  0
  0
  0
  0
  0
  0
Current shareholders' claim on cash, %
  50.0
  21.1
  8.9
  3.7
  1.6
  0.7
  0.3
  0.1
  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
  0.0
  0.0
  0.0
  0.0
  0.0
  0.0
  0.0

Atlantic Power Corporation (Atlantic Power) owns and operates a fleet of power generation assets in the United States and Canada. The Company's power generation projects sell electricity to utilities and other commercial customers. Atlantic Power's segments include East U.S., West U.S. and Canada. The Company's East U.S. segment comprises natural gas, biomass, coal and hydro projects. The Company's projects under the West U.S. segment include Naval Station, Naval Training Center, North Island, Oxnard, Manchief and Frederickson, which are focused on natural gas, and Koma Kulshan, which is focused on hydro. Under the Canada segment, the Company's projects located in British Columbia include Mamquam, Mamquam and Williams Lake. Its Calstock and Tunis projects are located in Ontario. The Company's portfolio consisted of interests in 19 operational power generation projects across nine states in the United States and two provinces in Canada, as of December 31, 2016.

FINANCIAL RATIOS  of  Atlantic Power (AT)

Valuation Ratios
P/E Ratio -2.2
Price to Sales 0.6
Price to Book 0.9
Price to Tangible Book
Price to Cash Flow 2.2
Price to Free Cash Flow 2.3
Growth Rates
Sales Growth Rate -5%
Sales - 3 Yr. Growth Rate %
EPS Growth Rate %
EPS - 3 Yr. Growth Rate %
Capital Spending Gr. Rate -36.4%
Cap. Spend. - 3 Yr. Gr. Rate -31.1%
Financial Strength
Quick Ratio 1
Current Ratio 0.1
LT Debt to Equity 297.2%
Total Debt to Equity 336.4%
Interest Coverage -1
Management Effectiveness
Return On Assets -3.3%
Ret/ On Assets - 3 Yr. Avg. -1.1%
Return On Total Capital -8.6%
Ret/ On T. Cap. - 3 Yr. Avg. -6.2%
Return On Equity -31.6%
Return On Equity - 3 Yr. Avg. -22%
Asset Turnover 0.3
Profitability Ratios
Gross Margin 21.1%
Gross Margin - 3 Yr. Avg. 21.7%
EBITDA Margin 14%
EBITDA Margin - 3 Yr. Avg. 23%
Operating Margin -32.3%
Oper. Margin - 3 Yr. Avg. -32.5%
Pre-Tax Margin -32.3%
Pre-Tax Margin - 3 Yr. Avg. -32.5%
Net Profit Margin -28.6%
Net Profit Margin - 3 Yr. Avg. -25.1%
Effective Tax Rate 11.6%
Eff/ Tax Rate - 3 Yr. Avg. 18.6%
Payout Ratio -7.9%

AT stock valuation input parameters

Revenue. Company's revenue (or sales) is always the starting point of any cash flow forecast. In the AT stock intrinsic value calculation we used $431 million for the last fiscal year's total revenue generated by Atlantic Power. The default revenue input number comes from 0001 income statement of Atlantic Power. 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 AT 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 11.6%, whose default value for AT is calculated based on our internal credit rating of Atlantic Power, 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 Atlantic Power.
    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 AT stock the variable cost ratio is equal to 119.5%.

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 AT 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 9.2% for Atlantic Power.

Corporate tax rate of 27% is the nominal tax rate for Atlantic Power. 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 AT 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 AT are equal to 183.6%.

Life of production assets of 8.1 years is the average useful life of capital assets used in Atlantic Power 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 AT is equal to 11.8%. 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 - $-18.4 million for Atlantic Power - 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 111.303 million for Atlantic Power 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 Atlantic Power at the current share price and the inputted number of shares is $0.2 billion.

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COMPANY NEWS

▶ Atlantic Power: 2Q Earnings Snapshot   [05:03AM  Associated Press]
▶ Atlantic Power Corporation to Host Earnings Call   [May-04-18 06:45AM  ACCESSWIRE]
▶ Atlantic Power: 1Q Earnings Snapshot   [05:09AM  Associated Press]
▶ Atlantic Power Corporation to Host Earnings Call   [Mar-02-18 06:30AM  ACCESSWIRE]
▶ Atlantic Power reports 4Q loss   [Mar-01-18 07:46PM  Associated Press]
▶ IIROC Trade Resumption - Atlantic Power Corporation   [Jan-29-18 08:44AM  Newsfile]
▶ IIROC Trade Halt - Atlantic Power Corporation   [Jan-22-18 04:25PM  Newsfile]
▶ Atlantic Power Corporation to Host Earnings Call   [Nov-10-17 06:00AM  ACCESSWIRE]
▶ Atlantic Power reports 3Q loss   [Nov-09-17 07:31PM  Associated Press]

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