Intrinsic value of Atlantica Yield plc - AY

Previous Close

$23.47

  Intrinsic Value

$24.99

stock screener

  Rating & Target

hold

+6%

Previous close

$23.47

 
Intrinsic value

$24.99

 
Up/down potential

+6%

 
Rating

hold

We calculate the intrinsic value of AY 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 2.4

 

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, %
  3.50
  3.65
  3.78
  3.91
  4.02
  4.11
  4.20
  4.28
  4.35
  4.42
  4.48
  4.53
  4.58
  4.62
  4.66
  4.69
  4.72
  4.75
  4.77
  4.80
  4.82
  4.84
  4.85
  4.87
  4.88
  4.89
  4.90
  4.91
  4.92
  4.93
Revenue, $m
  1,081
  1,120
  1,162
  1,208
  1,256
  1,308
  1,363
  1,421
  1,483
  1,549
  1,618
  1,691
  1,769
  1,850
  1,937
  2,027
  2,123
  2,224
  2,330
  2,442
  2,560
  2,683
  2,814
  2,951
  3,095
  3,246
  3,405
  3,572
  3,748
  3,933
Variable operating expenses, $m
  166
  172
  179
  186
  193
  201
  210
  219
  228
  239
  249
  260
  272
  285
  298
  312
  327
  343
  359
  376
  394
  413
  433
  454
  477
  500
  524
  550
  577
  606
Fixed operating expenses, $m
  412
  421
  430
  440
  449
  459
  469
  480
  490
  501
  512
  523
  535
  547
  559
  571
  583
  596
  609
  623
  636
  650
  665
  679
  694
  710
  725
  741
  757
  774
Total operating expenses, $m
  578
  593
  609
  626
  642
  660
  679
  699
  718
  740
  761
  783
  807
  832
  857
  883
  910
  939
  968
  999
  1,030
  1,063
  1,098
  1,133
  1,171
  1,210
  1,249
  1,291
  1,334
  1,380
Operating income, $m
  502
  527
  553
  582
  613
  647
  684
  723
  765
  809
  857
  908
  962
  1,019
  1,080
  1,144
  1,213
  1,285
  1,362
  1,443
  1,529
  1,620
  1,716
  1,817
  1,924
  2,037
  2,156
  2,281
  2,414
  2,553
EBITDA, $m
  502
  527
  553
  582
  613
  647
  684
  723
  765
  809
  857
  908
  962
  1,019
  1,080
  1,144
  1,213
  1,285
  1,362
  1,443
  1,529
  1,620
  1,716
  1,817
  1,924
  2,037
  2,156
  2,281
  2,414
  2,553
Interest expense (income), $m
  335
  410
  429
  450
  472
  496
  522
  549
  578
  609
  641
  676
  712
  751
  792
  835
  881
  929
  979
  1,032
  1,088
  1,147
  1,209
  1,275
  1,344
  1,416
  1,492
  1,572
  1,656
  1,744
  1,837
Earnings before tax, $m
  92
  98
  104
  110
  118
  126
  135
  145
  156
  168
  181
  195
  210
  227
  245
  264
  284
  306
  330
  355
  382
  410
  441
  473
  508
  545
  584
  625
  670
  716
Tax expense, $m
  25
  26
  28
  30
  32
  34
  36
  39
  42
  45
  49
  53
  57
  61
  66
  71
  77
  83
  89
  96
  103
  111
  119
  128
  137
  147
  158
  169
  181
  193
Net income, $m
  67
  71
  76
  80
  86
  92
  98
  106
  114
  123
  132
  142
  154
  166
  179
  193
  208
  224
  241
  259
  279
  300
  322
  346
  371
  398
  426
  457
  489
  523

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
  9,562
  9,911
  10,286
  10,688
  11,118
  11,575
  12,061
  12,578
  13,126
  13,706
  14,319
  14,968
  15,653
  16,376
  17,138
  17,942
  18,790
  19,682
  20,622
  21,611
  22,652
  23,748
  24,900
  26,112
  27,386
  28,726
  30,135
  31,615
  33,171
  34,806
Adjusted assets (=assets-cash), $m
  9,562
  9,911
  10,286
  10,688
  11,118
  11,575
  12,061
  12,578
  13,126
  13,706
  14,319
  14,968
  15,653
  16,376
  17,138
  17,942
  18,790
  19,682
  20,622
  21,611
  22,652
  23,748
  24,900
  26,112
  27,386
  28,726
  30,135
  31,615
  33,171
  34,806
Revenue / Adjusted assets
  0.113
  0.113
  0.113
  0.113
  0.113
  0.113
  0.113
  0.113
  0.113
  0.113
  0.113
  0.113
  0.113
  0.113
  0.113
  0.113
  0.113
  0.113
  0.113
  0.113
  0.113
  0.113
  0.113
  0.113
  0.113
  0.113
  0.113
  0.113
  0.113
  0.113
Average production assets, $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
Working capital, $m
  51
  53
  55
  57
  59
  61
  64
  67
  70
  73
  76
  79
  83
  87
  91
  95
  100
  105
  110
  115
  120
  126
  132
  139
  145
  153
  160
  168
  176
  185
Total debt, $m
  6,039
  6,332
  6,648
  6,985
  7,346
  7,730
  8,138
  8,572
  9,032
  9,520
  10,035
  10,580
  11,155
  11,763
  12,403
  13,078
  13,790
  14,540
  15,329
  16,160
  17,035
  17,955
  18,923
  19,941
  21,011
  22,137
  23,320
  24,563
  25,870
  27,244
Total liabilities, $m
  8,032
  8,326
  8,641
  8,978
  9,339
  9,723
  10,132
  10,565
  11,026
  11,513
  12,028
  12,573
  13,148
  13,756
  14,396
  15,072
  15,783
  16,533
  17,322
  18,153
  19,028
  19,948
  20,916
  21,934
  23,004
  24,130
  25,313
  26,557
  27,864
  29,237
Total equity, $m
  1,530
  1,586
  1,646
  1,710
  1,779
  1,852
  1,930
  2,012
  2,100
  2,193
  2,291
  2,395
  2,504
  2,620
  2,742
  2,871
  3,006
  3,149
  3,299
  3,458
  3,624
  3,800
  3,984
  4,178
  4,382
  4,596
  4,822
  5,058
  5,307
  5,569
Total liabilities and equity, $m
  9,562
  9,912
  10,287
  10,688
  11,118
  11,575
  12,062
  12,577
  13,126
  13,706
  14,319
  14,968
  15,652
  16,376
  17,138
  17,943
  18,789
  19,682
  20,621
  21,611
  22,652
  23,748
  24,900
  26,112
  27,386
  28,726
  30,135
  31,615
  33,171
  34,806
Debt-to-equity ratio
  3.950
  3.990
  4.040
  4.080
  4.130
  4.170
  4.220
  4.260
  4.300
  4.340
  4.380
  4.420
  4.450
  4.490
  4.520
  4.560
  4.590
  4.620
  4.650
  4.670
  4.700
  4.730
  4.750
  4.770
  4.800
  4.820
  4.840
  4.860
  4.870
  4.890
Adjusted equity ratio
  0.160
  0.160
  0.160
  0.160
  0.160
  0.160
  0.160
  0.160
  0.160
  0.160
  0.160
  0.160
  0.160
  0.160
  0.160
  0.160
  0.160
  0.160
  0.160
  0.160
  0.160
  0.160
  0.160
  0.160
  0.160
  0.160
  0.160
  0.160
  0.160
  0.160

CASH FLOW

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Net income, $m
  67
  71
  76
  80
  86
  92
  98
  106
  114
  123
  132
  142
  154
  166
  179
  193
  208
  224
  241
  259
  279
  300
  322
  346
  371
  398
  426
  457
  489
  523
Depreciation, amort., depletion, $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
Funds from operations, $m
  67
  71
  76
  80
  86
  92
  98
  106
  114
  123
  132
  142
  154
  166
  179
  193
  208
  224
  241
  259
  279
  300
  322
  346
  371
  398
  426
  457
  489
  523
Change in working capital, $m
  2
  2
  2
  2
  2
  2
  3
  3
  3
  3
  3
  3
  4
  4
  4
  4
  4
  5
  5
  5
  6
  6
  6
  6
  7
  7
  7
  8
  8
  9
Cash from operations, $m
  66
  70
  74
  78
  84
  89
  96
  103
  111
  120
  129
  139
  150
  162
  175
  188
  203
  219
  236
  254
  273
  294
  316
  339
  364
  391
  419
  449
  481
  514
Maintenance CAPEX, $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
New CAPEX, $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 investing activities, $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
Free cash flow, $m
  66
  70
  74
  78
  84
  89
  96
  103
  111
  120
  129
  139
  150
  162
  175
  188
  203
  219
  236
  254
  273
  294
  316
  339
  364
  391
  419
  449
  481
  514
Issuance/(repayment) of debt, $m
  264
  293
  315
  338
  361
  384
  409
  434
  460
  487
  515
  545
  575
  607
  641
  675
  712
  750
  789
  831
  875
  920
  968
  1,018
  1,070
  1,125
  1,183
  1,244
  1,307
  1,373
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  
  264
  293
  315
  338
  361
  384
  409
  434
  460
  487
  515
  545
  575
  607
  641
  675
  712
  750
  789
  831
  875
  920
  968
  1,018
  1,070
  1,125
  1,183
  1,244
  1,307
  1,373
Total cash flow (excl. dividends), $m
  330
  363
  389
  416
  444
  474
  505
  537
  571
  607
  644
  684
  725
  769
  815
  864
  915
  968
  1,025
  1,085
  1,148
  1,214
  1,284
  1,357
  1,434
  1,516
  1,602
  1,692
  1,788
  1,888
Retained Cash Flow (-), $m
  -46
  -56
  -60
  -64
  -69
  -73
  -78
  -83
  -88
  -93
  -98
  -104
  -110
  -116
  -122
  -129
  -136
  -143
  -150
  -158
  -167
  -175
  -184
  -194
  -204
  -214
  -225
  -237
  -249
  -262
Prev. year cash balance distribution, $m
  133
  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
  417
  307
  329
  352
  375
  400
  427
  454
  483
  514
  546
  580
  616
  653
  693
  735
  779
  826
  875
  927
  981
  1,039
  1,099
  1,163
  1,231
  1,302
  1,376
  1,455
  1,539
  1,626
Discount rate, %
  10.40
  10.92
  11.47
  12.04
  12.64
  13.27
  13.94
  14.63
  15.37
  16.13
  16.94
  17.79
  18.68
  19.61
  20.59
  21.62
  22.70
  23.84
  25.03
  26.28
  27.59
  28.97
  30.42
  31.94
  33.54
  35.22
  36.98
  38.83
  40.77
  42.81
PV of cash for distribution, $m
  378
  249
  237
  223
  207
  190
  171
  152
  134
  115
  98
  81
  66
  53
  42
  32
  24
  18
  13
  9
  6
  4
  2
  2
  1
  1
  0
  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

Atlantica Yield plc, formerly Abengoa Yield plc, is a total return company. The Company owns, manages, and acquires renewable energy, conventional power, electric transmission lines and water assets, focused on North America (the United States and Mexico), South America (Peru, Chile, Brazil and Uruguay) and Europe, Middle East and Africa (Spain, Algeria and South Africa). Its segments include North America, South America and EMEA. It operates in business sectors, including renewable energy, conventional power, electric transmission lines and water. As of December 31, 2016, it owned or had interests in 21 assets, comprising 1,442 megawatt (MW) of renewable energy generation, 300 MW of conventional power generation, 1,099 miles of electric transmission lines, as well as an exchangeable preferred equity investment in Abengoa Concessoes Brasil Holding S.A., (ACBH). The renewable energy sector includes its activities related to the production electricity from solar power and wind plants.

FINANCIAL RATIOS  of  Atlantica Yield plc (AY)

Valuation Ratios
P/E Ratio -470.4
Price to Sales 2.4
Price to Book 1.3
Price to Tangible Book
Price to Cash Flow 7
Price to Free Cash Flow 7.2
Growth Rates
Sales Growth Rate 22.9%
Sales - 3 Yr. Growth Rate %
EPS Growth Rate %
EPS - 3 Yr. Growth Rate %
Capital Spending Gr. Rate -94.3%
Cap. Spend. - 3 Yr. Gr. Rate -56.9%
Financial Strength
Quick Ratio 1
Current Ratio 0
LT Debt to Equity 273.1%
Total Debt to Equity 327.3%
Interest Coverage 1
Management Effectiveness
Return On Assets 2.1%
Ret/ On Assets - 3 Yr. Avg. 1.9%
Return On Total Capital -0.1%
Ret/ On T. Cap. - 3 Yr. Avg. -1.2%
Return On Equity -0.3%
Return On Equity - 3 Yr. Avg. -4.6%
Asset Turnover 0.1
Profitability Ratios
Gross Margin 92.6%
Gross Margin - 3 Yr. Avg. 91.9%
EBITDA Margin 69%
EBITDA Margin - 3 Yr. Avg. 62.8%
Operating Margin 41.5%
Oper. Margin - 3 Yr. Avg. 44.3%
Pre-Tax Margin 0.3%
Pre-Tax Margin - 3 Yr. Avg. -9.5%
Net Profit Margin -0.5%
Net Profit Margin - 3 Yr. Avg. -11.9%
Effective Tax Rate 33.3%
Eff/ Tax Rate - 3 Yr. Avg. 1.2%
Payout Ratio -720%

AY stock valuation input parameters

Revenue. Company's revenue (or sales) is always the starting point of any cash flow forecast. In the AY stock intrinsic value calculation we used $1044 million for the last fiscal year's total revenue generated by Atlantica Yield plc. The default revenue input number comes from 0001 income statement of Atlantica Yield plc. 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 AY stock valuation model: a) initial revenue growth rate of 3.5% 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 10.4%, whose default value for AY is calculated based on our internal credit rating of Atlantica Yield plc, 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 Atlantica Yield plc.
    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 AY stock the variable cost ratio is equal to 15.4%.

Fixed operating expenses is just that - expenses that are not dependant on the volume of production. They are set to $403 million in the base year in the intrinsic value calculation for AY 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 7.1% for Atlantica Yield plc.

Corporate tax rate of 27% is the nominal tax rate for Atlantica Yield plc. 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 AY 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 AY are equal to 0%.

Life of production assets of 0 years is the average useful life of capital assets used in Atlantica Yield plc 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 AY 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 - $1617.384 million for Atlantica Yield plc - 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 100.360 million for Atlantica Yield plc 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 Atlantica Yield plc at the current share price and the inputted number of shares is $2.4 billion.

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