Intrinsic value of Atlantic Power Corporation - AT

Previous Close

$2.60

  Intrinsic Value

$0.00

stock screener

  Rating & Target

str. sell

-100%

Previous close

$2.60

 
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 0.3

 

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, %
  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
  288
  294
  302
  310
  320
  330
  341
  353
  367
  381
  396
  412
  429
  447
  466
  487
  508
  531
  555
  581
  608
  636
  666
  698
  731
  766
  803
  841
  882
  925
Variable operating expenses, $m
  288
  295
  302
  310
  318
  328
  339
  350
  362
  375
  370
  385
  401
  419
  437
  456
  476
  497
  520
  544
  569
  596
  624
  653
  684
  717
  752
  788
  826
  866
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
  288
  295
  302
  310
  318
  328
  339
  350
  362
  375
  370
  385
  401
  419
  437
  456
  476
  497
  520
  544
  569
  596
  624
  653
  684
  717
  752
  788
  826
  866
Operating income, $m
  -1
  0
  0
  1
  1
  2
  3
  3
  4
  5
  25
  26
  27
  28
  30
  31
  32
  34
  35
  37
  39
  41
  42
  44
  47
  49
  51
  54
  56
  59
EBITDA, $m
  93
  95
  97
  100
  103
  106
  110
  114
  118
  122
  127
  132
  138
  144
  150
  157
  164
  171
  179
  187
  196
  205
  214
  225
  235
  246
  258
  271
  284
  298
Interest expense (income), $m
  71
  51
  44
  46
  47
  49
  51
  54
  56
  59
  62
  65
  69
  72
  76
  80
  85
  89
  94
  99
  105
  110
  116
  123
  130
  137
  144
  152
  160
  169
  178
Earnings before tax, $m
  -51
  -45
  -46
  -47
  -48
  -50
  -51
  -53
  -55
  -57
  -40
  -42
  -45
  -48
  -50
  -54
  -57
  -60
  -64
  -68
  -72
  -76
  -80
  -85
  -90
  -95
  -101
  -107
  -113
  -119
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
  -51
  -45
  -46
  -47
  -48
  -50
  -51
  -53
  -55
  -57
  -40
  -42
  -45
  -48
  -50
  -54
  -57
  -60
  -64
  -68
  -72
  -76
  -80
  -85
  -90
  -95
  -101
  -107
  -113
  -119

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
  1,002
  1,025
  1,052
  1,081
  1,114
  1,150
  1,189
  1,232
  1,277
  1,326
  1,379
  1,435
  1,494
  1,557
  1,625
  1,696
  1,771
  1,851
  1,935
  2,024
  2,118
  2,217
  2,321
  2,431
  2,547
  2,669
  2,797
  2,932
  3,074
  3,223
Adjusted assets (=assets-cash), $m
  1,002
  1,025
  1,052
  1,081
  1,114
  1,150
  1,189
  1,232
  1,277
  1,326
  1,379
  1,435
  1,494
  1,557
  1,625
  1,696
  1,771
  1,851
  1,935
  2,024
  2,118
  2,217
  2,321
  2,431
  2,547
  2,669
  2,797
  2,932
  3,074
  3,223
Revenue / Adjusted assets
  0.287
  0.287
  0.287
  0.287
  0.287
  0.287
  0.287
  0.287
  0.287
  0.287
  0.287
  0.287
  0.287
  0.287
  0.287
  0.287
  0.287
  0.287
  0.287
  0.287
  0.287
  0.287
  0.287
  0.287
  0.287
  0.287
  0.287
  0.287
  0.287
  0.287
Average production assets, $m
  690
  706
  724
  745
  767
  792
  819
  848
  880
  913
  950
  988
  1,029
  1,073
  1,119
  1,168
  1,220
  1,275
  1,333
  1,394
  1,459
  1,527
  1,599
  1,674
  1,754
  1,838
  1,926
  2,019
  2,117
  2,220
Working capital, $m
  37
  38
  39
  40
  41
  42
  44
  45
  47
  49
  51
  53
  55
  57
  60
  62
  65
  68
  71
  74
  78
  81
  85
  89
  94
  98
  103
  108
  113
  118
Total debt, $m
  614
  635
  658
  685
  714
  747
  782
  820
  861
  905
  953
  1,003
  1,057
  1,114
  1,174
  1,238
  1,306
  1,378
  1,454
  1,534
  1,618
  1,707
  1,801
  1,900
  2,004
  2,114
  2,229
  2,351
  2,478
  2,613
Total liabilities, $m
  902
  923
  946
  973
  1,003
  1,035
  1,070
  1,108
  1,149
  1,194
  1,241
  1,291
  1,345
  1,402
  1,462
  1,526
  1,594
  1,666
  1,742
  1,822
  1,906
  1,995
  2,089
  2,188
  2,292
  2,402
  2,517
  2,639
  2,766
  2,901
Total equity, $m
  100
  103
  105
  108
  111
  115
  119
  123
  128
  133
  138
  143
  149
  156
  162
  170
  177
  185
  194
  202
  212
  222
  232
  243
  255
  267
  280
  293
  307
  322
Total liabilities and equity, $m
  1,002
  1,026
  1,051
  1,081
  1,114
  1,150
  1,189
  1,231
  1,277
  1,327
  1,379
  1,434
  1,494
  1,558
  1,624
  1,696
  1,771
  1,851
  1,936
  2,024
  2,118
  2,217
  2,321
  2,431
  2,547
  2,669
  2,797
  2,932
  3,073
  3,223
Debt-to-equity ratio
  6.130
  6.190
  6.260
  6.340
  6.410
  6.490
  6.580
  6.660
  6.740
  6.830
  6.910
  6.990
  7.070
  7.150
  7.230
  7.300
  7.370
  7.440
  7.510
  7.580
  7.640
  7.700
  7.760
  7.810
  7.870
  7.920
  7.970
  8.020
  8.060
  8.110
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
  -51
  -45
  -46
  -47
  -48
  -50
  -51
  -53
  -55
  -57
  -40
  -42
  -45
  -48
  -50
  -54
  -57
  -60
  -64
  -68
  -72
  -76
  -80
  -85
  -90
  -95
  -101
  -107
  -113
  -119
Depreciation, amort., depletion, $m
  93
  95
  97
  99
  102
  104
  107
  110
  114
  117
  102
  106
  111
  115
  120
  126
  131
  137
  143
  150
  157
  164
  172
  180
  189
  198
  207
  217
  228
  239
Funds from operations, $m
  42
  50
  51
  52
  54
  55
  56
  57
  59
  60
  62
  64
  66
  68
  70
  72
  74
  77
  80
  82
  85
  88
  91
  95
  98
  102
  106
  110
  115
  119
Change in working capital, $m
  1
  1
  1
  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
Cash from operations, $m
  41
  50
  50
  51
  52
  53
  55
  56
  57
  59
  60
  62
  64
  65
  67
  69
  72
  74
  76
  79
  82
  85
  88
  91
  94
  98
  101
  105
  109
  114
Maintenance CAPEX, $m
  -73
  -74
  -76
  -78
  -80
  -83
  -85
  -88
  -91
  -95
  -98
  -102
  -106
  -111
  -115
  -120
  -126
  -131
  -137
  -143
  -150
  -157
  -164
  -172
  -180
  -189
  -198
  -207
  -217
  -228
New CAPEX, $m
  -13
  -16
  -18
  -20
  -23
  -25
  -27
  -29
  -31
  -34
  -36
  -39
  -41
  -44
  -46
  -49
  -52
  -55
  -58
  -61
  -65
  -68
  -72
  -76
  -80
  -84
  -88
  -93
  -98
  -103
Cash from investing activities, $m
  -86
  -90
  -94
  -98
  -103
  -108
  -112
  -117
  -122
  -129
  -134
  -141
  -147
  -155
  -161
  -169
  -178
  -186
  -195
  -204
  -215
  -225
  -236
  -248
  -260
  -273
  -286
  -300
  -315
  -331
Free cash flow, $m
  -45
  -40
  -44
  -47
  -50
  -54
  -58
  -61
  -65
  -70
  -74
  -79
  -84
  -89
  -94
  -100
  -106
  -112
  -119
  -126
  -133
  -140
  -148
  -157
  -166
  -175
  -185
  -195
  -206
  -217
Issuance/(repayment) of debt, $m
  -89
  21
  24
  27
  30
  32
  35
  38
  41
  44
  47
  50
  54
  57
  60
  64
  68
  72
  76
  80
  84
  89
  94
  99
  104
  110
  115
  121
  128
  134
Issuance/(repurchase) of shares, $m
  158
  47
  48
  50
  51
  53
  55
  57
  59
  62
  45
  48
  51
  54
  57
  61
  64
  68
  72
  77
  81
  86
  91
  96
  102
  108
  114
  120
  127
  134
Cash from financing (excl. dividends), $m  
  69
  68
  72
  77
  81
  85
  90
  95
  100
  106
  92
  98
  105
  111
  117
  125
  132
  140
  148
  157
  165
  175
  185
  195
  206
  218
  229
  241
  255
  268
Total cash flow (excl. dividends), $m
  25
  27
  28
  29
  31
  32
  33
  34
  35
  36
  18
  20
  21
  22
  23
  25
  26
  28
  29
  31
  33
  34
  36
  38
  40
  42
  45
  47
  49
  52
Retained Cash Flow (-), $m
  -158
  -47
  -48
  -50
  -51
  -53
  -55
  -57
  -59
  -62
  -45
  -48
  -51
  -54
  -57
  -61
  -64
  -68
  -72
  -77
  -81
  -86
  -91
  -96
  -102
  -108
  -114
  -120
  -127
  -134
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
  -134
  -20
  -20
  -20
  -21
  -21
  -22
  -23
  -24
  -26
  -27
  -28
  -30
  -32
  -34
  -36
  -38
  -40
  -43
  -46
  -48
  -51
  -55
  -58
  -61
  -65
  -69
  -73
  -78
  -82
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
  -120
  -16
  -14
  -12
  -11
  -9
  -8
  -7
  -6
  -5
  -4
  -3
  -3
  -2
  -2
  -1
  -1
  -1
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
Current shareholders' claim on cash, %
  50.0
  34.1
  23.2
  15.7
  10.7
  7.2
  4.9
  3.3
  2.2
  1.5
  1.1
  0.8
  0.6
  0.5
  0.3
  0.2
  0.2
  0.1
  0.1
  0.1
  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 Corporation (AT)

Valuation Ratios
P/E Ratio -2.6
Price to Sales 0.7
Price to Book 1
Price to Tangible Book
Price to Cash Flow 2.7
Price to Free Cash Flow 2.8
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 $282 million for the last fiscal year's total revenue generated by Atlantic Power Corporation. The default revenue input number comes from 0001 income statement of Atlantic Power 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 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 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 Atlantic Power 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 AT stock the variable cost ratio is equal to 100.4%.

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 7.2% for Atlantic Power Corporation.

Corporate tax rate of 27% is the nominal tax rate for Atlantic Power 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 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 240%.

Life of production assets of 9.3 years is the average useful life of capital assets used in Atlantic Power 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 AT is equal to 12.8%. 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 - $-6.9 million for Atlantic Power 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 108.477 million for Atlantic Power 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 Atlantic Power Corporation at the current share price and the inputted number of shares is $0.3 billion.

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