Intrinsic value of CAI International, Inc. - CAI

Previous Close

$19.11

  Intrinsic Value

$26.84

stock screener

  Rating & Target

buy

+40%

Previous close

$19.11

 
Intrinsic value

$26.84

 
Up/down potential

+40%

 
Rating

buy

We calculate the intrinsic value of CAI 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 0.4

 

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, %
  22.90
  21.11
  19.50
  18.05
  16.74
  15.57
  14.51
  13.56
  12.71
  11.93
  11.24
  10.62
  10.06
  9.55
  9.09
  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
Revenue, $m
  531
  643
  768
  907
  1,059
  1,224
  1,401
  1,592
  1,794
  2,008
  2,233
  2,471
  2,719
  2,979
  3,250
  3,532
  3,826
  4,131
  4,449
  4,779
  5,122
  5,478
  5,848
  6,234
  6,634
  7,051
  7,485
  7,938
  8,409
  8,900
Variable operating expenses, $m
  217
  263
  313
  369
  431
  498
  570
  647
  728
  815
  904
  1,000
  1,101
  1,206
  1,316
  1,430
  1,549
  1,673
  1,801
  1,935
  2,074
  2,218
  2,368
  2,524
  2,686
  2,855
  3,031
  3,214
  3,405
  3,604
Fixed operating expenses, $m
  98
  100
  102
  105
  107
  109
  112
  114
  117
  119
  122
  125
  127
  130
  133
  136
  139
  142
  145
  148
  152
  155
  158
  162
  165
  169
  173
  177
  180
  184
Total operating expenses, $m
  315
  363
  415
  474
  538
  607
  682
  761
  845
  934
  1,026
  1,125
  1,228
  1,336
  1,449
  1,566
  1,688
  1,815
  1,946
  2,083
  2,226
  2,373
  2,526
  2,686
  2,851
  3,024
  3,204
  3,391
  3,585
  3,788
Operating income, $m
  216
  280
  353
  433
  521
  617
  720
  831
  948
  1,073
  1,207
  1,346
  1,491
  1,642
  1,801
  1,966
  2,138
  2,316
  2,502
  2,695
  2,896
  3,105
  3,322
  3,548
  3,783
  4,027
  4,282
  4,547
  4,824
  5,112
EBITDA, $m
  369
  465
  573
  693
  824
  966
  1,120
  1,285
  1,460
  1,646
  1,841
  2,047
  2,263
  2,488
  2,724
  2,969
  3,224
  3,490
  3,766
  4,053
  4,351
  4,661
  4,983
  5,318
  5,667
  6,030
  6,408
  6,801
  7,212
  7,640
Interest expense (income), $m
  1
  117
  145
  177
  212
  252
  295
  342
  393
  447
  504
  565
  629
  697
  767
  841
  918
  999
  1,082
  1,169
  1,260
  1,353
  1,451
  1,552
  1,658
  1,767
  1,881
  2,000
  2,124
  2,252
  2,386
Earnings before tax, $m
  99
  135
  176
  220
  269
  322
  378
  438
  502
  569
  642
  716
  794
  875
  959
  1,047
  1,139
  1,234
  1,333
  1,436
  1,543
  1,654
  1,770
  1,890
  2,015
  2,146
  2,282
  2,423
  2,571
  2,726
Tax expense, $m
  27
  37
  47
  60
  73
  87
  102
  118
  135
  154
  173
  193
  214
  236
  259
  283
  308
  333
  360
  388
  417
  447
  478
  510
  544
  579
  616
  654
  694
  736
Net income, $m
  72
  99
  128
  161
  196
  235
  276
  320
  366
  415
  469
  523
  580
  639
  700
  765
  831
  901
  973
  1,048
  1,126
  1,207
  1,292
  1,380
  1,471
  1,566
  1,666
  1,769
  1,877
  1,990

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
  3,662
  4,435
  5,299
  6,256
  7,303
  8,440
  9,665
  10,976
  12,370
  13,847
  15,403
  17,039
  18,752
  20,543
  22,411
  24,358
  26,384
  28,490
  30,680
  32,956
  35,321
  37,779
  40,334
  42,991
  45,754
  48,630
  51,624
  54,742
  57,992
  61,380
Adjusted assets (=assets-cash), $m
  3,662
  4,435
  5,299
  6,256
  7,303
  8,440
  9,665
  10,976
  12,370
  13,847
  15,403
  17,039
  18,752
  20,543
  22,411
  24,358
  26,384
  28,490
  30,680
  32,956
  35,321
  37,779
  40,334
  42,991
  45,754
  48,630
  51,624
  54,742
  57,992
  61,380
Revenue / Adjusted assets
  0.145
  0.145
  0.145
  0.145
  0.145
  0.145
  0.145
  0.145
  0.145
  0.145
  0.145
  0.145
  0.145
  0.145
  0.145
  0.145
  0.145
  0.145
  0.145
  0.145
  0.145
  0.145
  0.145
  0.145
  0.145
  0.145
  0.145
  0.145
  0.145
  0.145
Average production assets, $m
  2,639
  3,196
  3,819
  4,508
  5,263
  6,082
  6,965
  7,910
  8,915
  9,979
  11,100
  12,279
  13,514
  14,804
  16,151
  17,553
  19,013
  20,532
  22,110
  23,750
  25,454
  27,226
  29,067
  30,981
  32,973
  35,045
  37,202
  39,450
  41,792
  44,234
Working capital, $m
  -57
  -69
  -82
  -97
  -113
  -131
  -150
  -170
  -192
  -215
  -239
  -264
  -291
  -319
  -348
  -378
  -409
  -442
  -476
  -511
  -548
  -586
  -626
  -667
  -710
  -754
  -801
  -849
  -900
  -952
Total debt, $m
  2,683
  3,273
  3,934
  4,665
  5,465
  6,334
  7,270
  8,271
  9,336
  10,464
  11,653
  12,903
  14,212
  15,580
  17,008
  18,495
  20,042
  21,652
  23,325
  25,064
  26,871
  28,749
  30,701
  32,730
  34,841
  37,038
  39,326
  41,708
  44,191
  46,780
Total liabilities, $m
  2,797
  3,388
  4,049
  4,779
  5,580
  6,448
  7,384
  8,386
  9,451
  10,579
  11,768
  13,018
  14,327
  15,695
  17,122
  18,609
  20,157
  21,767
  23,440
  25,179
  26,985
  28,863
  30,815
  32,845
  34,956
  37,153
  39,440
  41,823
  44,306
  46,895
Total equity, $m
  864
  1,047
  1,251
  1,476
  1,724
  1,992
  2,281
  2,590
  2,919
  3,268
  3,635
  4,021
  4,425
  4,848
  5,289
  5,748
  6,227
  6,724
  7,241
  7,778
  8,336
  8,916
  9,519
  10,146
  10,798
  11,477
  12,183
  12,919
  13,686
  14,486
Total liabilities and equity, $m
  3,661
  4,435
  5,300
  6,255
  7,304
  8,440
  9,665
  10,976
  12,370
  13,847
  15,403
  17,039
  18,752
  20,543
  22,411
  24,357
  26,384
  28,491
  30,681
  32,957
  35,321
  37,779
  40,334
  42,991
  45,754
  48,630
  51,623
  54,742
  57,992
  61,381
Debt-to-equity ratio
  3.100
  3.130
  3.150
  3.160
  3.170
  3.180
  3.190
  3.190
  3.200
  3.200
  3.210
  3.210
  3.210
  3.210
  3.220
  3.220
  3.220
  3.220
  3.220
  3.220
  3.220
  3.220
  3.230
  3.230
  3.230
  3.230
  3.230
  3.230
  3.230
  3.230
Adjusted equity ratio
  0.236
  0.236
  0.236
  0.236
  0.236
  0.236
  0.236
  0.236
  0.236
  0.236
  0.236
  0.236
  0.236
  0.236
  0.236
  0.236
  0.236
  0.236
  0.236
  0.236
  0.236
  0.236
  0.236
  0.236
  0.236
  0.236
  0.236
  0.236
  0.236
  0.236

CASH FLOW

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Net income, $m
  72
  99
  128
  161
  196
  235
  276
  320
  366
  415
  469
  523
  580
  639
  700
  765
  831
  901
  973
  1,048
  1,126
  1,207
  1,292
  1,380
  1,471
  1,566
  1,666
  1,769
  1,877
  1,990
Depreciation, amort., depletion, $m
  153
  185
  220
  260
  303
  350
  400
  454
  512
  572
  634
  702
  772
  846
  923
  1,003
  1,086
  1,173
  1,263
  1,357
  1,455
  1,556
  1,661
  1,770
  1,884
  2,003
  2,126
  2,254
  2,388
  2,528
Funds from operations, $m
  225
  284
  349
  421
  499
  585
  676
  774
  878
  988
  1,103
  1,225
  1,352
  1,485
  1,623
  1,768
  1,918
  2,074
  2,237
  2,405
  2,581
  2,763
  2,953
  3,150
  3,355
  3,569
  3,791
  4,023
  4,265
  4,517
Change in working capital, $m
  -11
  -12
  -13
  -15
  -16
  -18
  -19
  -20
  -22
  -23
  -24
  -25
  -27
  -28
  -29
  -30
  -31
  -33
  -34
  -35
  -37
  -38
  -40
  -41
  -43
  -45
  -46
  -48
  -50
  -53
Cash from operations, $m
  236
  296
  362
  436
  516
  602
  695
  794
  900
  1,011
  1,127
  1,250
  1,378
  1,512
  1,652
  1,798
  1,949
  2,107
  2,270
  2,441
  2,617
  2,801
  2,992
  3,191
  3,398
  3,614
  3,838
  4,072
  4,316
  4,570
Maintenance CAPEX, $m
  -123
  -151
  -183
  -218
  -258
  -301
  -348
  -398
  -452
  -509
  -570
  -634
  -702
  -772
  -846
  -923
  -1,003
  -1,086
  -1,173
  -1,263
  -1,357
  -1,455
  -1,556
  -1,661
  -1,770
  -1,884
  -2,003
  -2,126
  -2,254
  -2,388
New CAPEX, $m
  -492
  -557
  -623
  -689
  -755
  -819
  -883
  -945
  -1,005
  -1,064
  -1,122
  -1,179
  -1,235
  -1,291
  -1,346
  -1,403
  -1,460
  -1,518
  -1,578
  -1,640
  -1,704
  -1,771
  -1,841
  -1,914
  -1,991
  -2,072
  -2,158
  -2,247
  -2,342
  -2,442
Cash from investing activities, $m
  -615
  -708
  -806
  -907
  -1,013
  -1,120
  -1,231
  -1,343
  -1,457
  -1,573
  -1,692
  -1,813
  -1,937
  -2,063
  -2,192
  -2,326
  -2,463
  -2,604
  -2,751
  -2,903
  -3,061
  -3,226
  -3,397
  -3,575
  -3,761
  -3,956
  -4,161
  -4,373
  -4,596
  -4,830
Free cash flow, $m
  -378
  -412
  -444
  -472
  -497
  -518
  -535
  -548
  -557
  -563
  -565
  -563
  -558
  -550
  -540
  -528
  -514
  -498
  -481
  -463
  -444
  -425
  -405
  -384
  -364
  -343
  -322
  -301
  -281
  -260
Issuance/(repayment) of debt, $m
  524
  591
  661
  731
  800
  869
  936
  1,001
  1,065
  1,128
  1,189
  1,249
  1,309
  1,368
  1,427
  1,487
  1,548
  1,610
  1,673
  1,739
  1,807
  1,878
  1,952
  2,030
  2,111
  2,197
  2,287
  2,383
  2,483
  2,589
Issuance/(repurchase) of shares, $m
  91
  84
  76
  65
  51
  34
  13
  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  
  615
  675
  737
  796
  851
  903
  949
  1,001
  1,065
  1,128
  1,189
  1,249
  1,309
  1,368
  1,427
  1,487
  1,548
  1,610
  1,673
  1,739
  1,807
  1,878
  1,952
  2,030
  2,111
  2,197
  2,287
  2,383
  2,483
  2,589
Total cash flow (excl. dividends), $m
  236
  262
  293
  324
  354
  384
  414
  453
  508
  565
  624
  687
  751
  818
  887
  959
  1,034
  1,112
  1,192
  1,276
  1,363
  1,453
  1,547
  1,645
  1,748
  1,854
  1,965
  2,081
  2,202
  2,329
Retained Cash Flow (-), $m
  -163
  -182
  -204
  -226
  -247
  -268
  -289
  -309
  -329
  -348
  -367
  -386
  -404
  -423
  -441
  -459
  -478
  -497
  -517
  -537
  -558
  -580
  -603
  -627
  -652
  -679
  -707
  -736
  -767
  -800
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
  73
  80
  89
  98
  107
  116
  125
  144
  179
  217
  257
  301
  347
  395
  446
  500
  556
  614
  675
  739
  805
  873
  944
  1,018
  1,095
  1,175
  1,259
  1,345
  1,435
  1,529
Discount rate, %
  10.70
  11.24
  11.80
  12.39
  13.01
  13.66
  14.34
  15.06
  15.81
  16.60
  17.43
  18.30
  19.22
  20.18
  21.19
  22.24
  23.36
  24.52
  25.75
  27.04
  28.39
  29.81
  31.30
  32.87
  34.51
  36.23
  38.05
  39.95
  41.95
  44.04
PV of cash for distribution, $m
  66
  64
  63
  61
  58
  54
  49
  47
  48
  47
  44
  40
  35
  30
  25
  20
  16
  12
  9
  6
  4
  3
  2
  1
  1
  0
  0
  0
  0
  0
Current shareholders' claim on cash, %
  84.4
  74.2
  67.2
  62.6
  59.6
  58.0
  57.5
  57.5
  57.5
  57.5
  57.5
  57.5
  57.5
  57.5
  57.5
  57.5
  57.5
  57.5
  57.5
  57.5
  57.5
  57.5
  57.5
  57.5
  57.5
  57.5
  57.5
  57.5
  57.5
  57.5

CAI International, Inc. is a transportation finance and logistics company. The Company purchases equipment, primarily intermodal shipping containers and railcars, which it leases to its customers, and also manages equipment for third-party investors. The Company operates through three segments: container leasing, rail leasing and logistics. In operating the Company's fleet, it leases, re-leases and disposes equipment and contracts for the repair, repositioning and storage of equipment. The Company also provides domestic and international logistics services. The Company leases its container equipment to lessees under long-term leases, short-term leases and finance leases. The Company's long-term leases have terms of one year or more and specify the number of containers to be leased, the pick-up and drop-off locations.

FINANCIAL RATIOS  of  CAI International, Inc. (CAI)

Valuation Ratios
P/E Ratio 60.7
Price to Sales 1.2
Price to Book 0.8
Price to Tangible Book
Price to Cash Flow 2.8
Price to Free Cash Flow -3
Growth Rates
Sales Growth Rate 17.6%
Sales - 3 Yr. Growth Rate %
EPS Growth Rate %
EPS - 3 Yr. Growth Rate %
Capital Spending Gr. Rate -35.5%
Cap. Spend. - 3 Yr. Gr. Rate -4.3%
Financial Strength
Quick Ratio 0
Current Ratio 0
LT Debt to Equity 301.3%
Total Debt to Equity 322.3%
Interest Coverage 11
Management Effectiveness
Return On Assets 0.3%
Ret/ On Assets - 3 Yr. Avg. 1.8%
Return On Total Capital 0.3%
Ret/ On T. Cap. - 3 Yr. Avg. 1.8%
Return On Equity 1.3%
Return On Equity - 3 Yr. Avg. 7.1%
Asset Turnover 0.1
Profitability Ratios
Gross Margin 82.3%
Gross Margin - 3 Yr. Avg. 92.8%
EBITDA Margin 39.8%
EBITDA Margin - 3 Yr. Avg. 54.2%
Operating Margin 18%
Oper. Margin - 3 Yr. Avg. 30.3%
Pre-Tax Margin 3.4%
Pre-Tax Margin - 3 Yr. Avg. 15.1%
Net Profit Margin 2%
Net Profit Margin - 3 Yr. Avg. 13.1%
Effective Tax Rate 40%
Eff/ Tax Rate - 3 Yr. Avg. 21.1%
Payout Ratio 0%

CAI stock valuation input parameters

Revenue. Company's revenue (or sales) is always the starting point of any cash flow forecast. In the CAI stock intrinsic value calculation we used $432 million for the last fiscal year's total revenue generated by CAI International, Inc.. The default revenue input number comes from 0001 income statement of CAI International, 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 CAI stock valuation model: a) initial revenue growth rate of 22.9% 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 10.7%, whose default value for CAI is calculated based on our internal credit rating of CAI International, 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 CAI International, 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 CAI stock the variable cost ratio is equal to 41%.

Fixed operating expenses is just that - expenses that are not dependant on the volume of production. They are set to $96 million in the base year in the intrinsic value calculation for CAI 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 5.4% for CAI International, Inc..

Corporate tax rate of 27% is the nominal tax rate for CAI International, 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 CAI 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 CAI are equal to 497%.

Life of production assets of 17.5 years is the average useful life of capital assets used in CAI International, 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 CAI is equal to -10.7%. 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 - $701.132 million for CAI International, 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 18.712 million for CAI International, 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 CAI International, Inc. at the current share price and the inputted number of shares is $0.4 billion.

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