Intrinsic value of Chicago Bridge&Iron - CBI

Previous Close

$16.39

  Intrinsic Value

$0.00

stock screener

  Rating & Target

str. sell

-100%

Previous close

$16.39

 
Intrinsic value

$0.00

 
Up/down potential

-100%

 
Rating

str. sell

We calculate the intrinsic value of CBI 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 2017), $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 1.7

 

FINANCIAL STATEMENTS FORECAST and PRESENT VALUE CALCULATION

Fiscal year
   2018
   2019
   2020
   2021
   2022
   2023
   2024
   2025
   2026
   2027
   2028
   2029
   2030
   2031
   2032
   2033
   2034
   2035
   2036
   2037
   2038
   2039
   2040
   2041
   2042
   2043
   2044
   2045
   2046
   2047

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
  6,806
  6,963
  7,142
  7,343
  7,565
  7,810
  8,076
  8,364
  8,674
  9,007
  9,363
  9,743
  10,147
  10,577
  11,034
  11,517
  12,029
  12,570
  13,142
  13,746
  14,383
  15,055
  15,763
  16,510
  17,296
  18,123
  18,994
  19,911
  20,875
  21,889
Variable operating expenses, $m
  4,159
  4,248
  4,350
  4,463
  4,590
  4,728
  4,879
  5,042
  5,217
  5,406
  5,304
  5,520
  5,749
  5,993
  6,251
  6,525
  6,815
  7,122
  7,446
  7,788
  8,149
  8,529
  8,931
  9,354
  9,799
  10,268
  10,761
  11,280
  11,827
  12,401
Fixed operating expenses, $m
  3,061
  3,128
  3,197
  3,267
  3,339
  3,413
  3,488
  3,565
  3,643
  3,723
  3,805
  3,889
  3,974
  4,062
  4,151
  4,242
  4,336
  4,431
  4,529
  4,628
  4,730
  4,834
  4,940
  5,049
  5,160
  5,274
  5,390
  5,508
  5,630
  5,753
Total operating expenses, $m
  7,220
  7,376
  7,547
  7,730
  7,929
  8,141
  8,367
  8,607
  8,860
  9,129
  9,109
  9,409
  9,723
  10,055
  10,402
  10,767
  11,151
  11,553
  11,975
  12,416
  12,879
  13,363
  13,871
  14,403
  14,959
  15,542
  16,151
  16,788
  17,457
  18,154
Operating income, $m
  -414
  -413
  -405
  -388
  -363
  -331
  -291
  -243
  -187
  -122
  253
  334
  424
  523
  631
  750
  878
  1,017
  1,168
  1,330
  1,504
  1,692
  1,892
  2,107
  2,337
  2,582
  2,843
  3,122
  3,419
  3,735
EBITDA, $m
  246
  255
  273
  300
  336
  382
  436
  499
  571
  653
  744
  845
  956
  1,077
  1,210
  1,353
  1,509
  1,676
  1,857
  2,050
  2,258
  2,480
  2,718
  2,972
  3,243
  3,531
  3,839
  4,165
  4,513
  4,882
Interest expense (income), $m
  99
  233
  205
  218
  233
  249
  268
  288
  310
  334
  360
  387
  417
  448
  482
  517
  555
  595
  638
  683
  730
  780
  833
  889
  947
  1,009
  1,074
  1,143
  1,215
  1,291
  1,371
Earnings before tax, $m
  -647
  -618
  -622
  -621
  -613
  -599
  -579
  -553
  -520
  -482
  -134
  -82
  -24
  41
  114
  194
  283
  380
  485
  600
  724
  859
  1,003
  1,160
  1,327
  1,507
  1,700
  1,907
  2,127
  2,363
Tax expense, $m
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  11
  31
  53
  76
  103
  131
  162
  196
  232
  271
  313
  358
  407
  459
  515
  574
  638
Net income, $m
  -647
  -618
  -622
  -621
  -613
  -599
  -579
  -553
  -520
  -482
  -134
  -82
  -24
  30
  83
  142
  207
  277
  354
  438
  529
  627
  733
  846
  969
  1,100
  1,241
  1,392
  1,553
  1,725

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
  6,088
  6,228
  6,388
  6,568
  6,767
  6,985
  7,223
  7,481
  7,758
  8,056
  8,375
  8,714
  9,076
  9,461
  9,869
  10,302
  10,759
  11,244
  11,755
  12,295
  12,865
  13,466
  14,100
  14,767
  15,470
  16,210
  16,989
  17,809
  18,672
  19,579
Adjusted assets (=assets-cash), $m
  6,088
  6,228
  6,388
  6,568
  6,767
  6,985
  7,223
  7,481
  7,758
  8,056
  8,375
  8,714
  9,076
  9,461
  9,869
  10,302
  10,759
  11,244
  11,755
  12,295
  12,865
  13,466
  14,100
  14,767
  15,470
  16,210
  16,989
  17,809
  18,672
  19,579
Revenue / Adjusted assets
  1.118
  1.118
  1.118
  1.118
  1.118
  1.118
  1.118
  1.118
  1.118
  1.118
  1.118
  1.118
  1.118
  1.118
  1.118
  1.118
  1.118
  1.118
  1.118
  1.118
  1.118
  1.118
  1.118
  1.118
  1.118
  1.118
  1.118
  1.118
  1.118
  1.118
Average production assets, $m
  3,567
  3,649
  3,742
  3,848
  3,964
  4,092
  4,232
  4,383
  4,545
  4,719
  4,906
  5,105
  5,317
  5,543
  5,782
  6,035
  6,303
  6,587
  6,886
  7,203
  7,537
  7,889
  8,260
  8,651
  9,063
  9,497
  9,953
  10,433
  10,939
  11,470
Working capital, $m
  -885
  -905
  -928
  -955
  -984
  -1,015
  -1,050
  -1,087
  -1,128
  -1,171
  -1,217
  -1,267
  -1,319
  -1,375
  -1,434
  -1,497
  -1,564
  -1,634
  -1,708
  -1,787
  -1,870
  -1,957
  -2,049
  -2,146
  -2,248
  -2,356
  -2,469
  -2,588
  -2,714
  -2,846
Total debt, $m
  1,988
  2,114
  2,258
  2,420
  2,599
  2,796
  3,010
  3,242
  3,491
  3,759
  4,046
  4,352
  4,678
  5,024
  5,391
  5,780
  6,192
  6,628
  7,088
  7,575
  8,087
  8,628
  9,199
  9,799
  10,432
  11,098
  11,799
  12,537
  13,313
  14,130
Total liabilities, $m
  5,479
  5,605
  5,749
  5,911
  6,090
  6,287
  6,501
  6,733
  6,982
  7,250
  7,537
  7,843
  8,169
  8,515
  8,882
  9,271
  9,683
  10,119
  10,580
  11,066
  11,579
  12,120
  12,690
  13,290
  13,923
  14,589
  15,291
  16,028
  16,805
  17,621
Total equity, $m
  609
  623
  639
  657
  677
  699
  722
  748
  776
  806
  837
  871
  908
  946
  987
  1,030
  1,076
  1,124
  1,176
  1,230
  1,287
  1,347
  1,410
  1,477
  1,547
  1,621
  1,699
  1,781
  1,867
  1,958
Total liabilities and equity, $m
  6,088
  6,228
  6,388
  6,568
  6,767
  6,986
  7,223
  7,481
  7,758
  8,056
  8,374
  8,714
  9,077
  9,461
  9,869
  10,301
  10,759
  11,243
  11,756
  12,296
  12,866
  13,467
  14,100
  14,767
  15,470
  16,210
  16,990
  17,809
  18,672
  19,579
Debt-to-equity ratio
  3.270
  3.390
  3.530
  3.680
  3.840
  4.000
  4.170
  4.330
  4.500
  4.670
  4.830
  4.990
  5.150
  5.310
  5.460
  5.610
  5.760
  5.890
  6.030
  6.160
  6.290
  6.410
  6.520
  6.640
  6.740
  6.850
  6.950
  7.040
  7.130
  7.220
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
  -647
  -618
  -622
  -621
  -613
  -599
  -579
  -553
  -520
  -482
  -134
  -82
  -24
  30
  83
  142
  207
  277
  354
  438
  529
  627
  733
  846
  969
  1,100
  1,241
  1,392
  1,553
  1,725
Depreciation, amort., depletion, $m
  660
  668
  678
  688
  700
  713
  726
  742
  758
  775
  491
  511
  532
  554
  578
  603
  630
  659
  689
  720
  754
  789
  826
  865
  906
  950
  995
  1,043
  1,094
  1,147
Funds from operations, $m
  13
  50
  55
  68
  87
  114
  148
  189
  237
  293
  357
  428
  508
  584
  661
  745
  837
  936
  1,043
  1,158
  1,282
  1,416
  1,559
  1,712
  1,875
  2,050
  2,236
  2,435
  2,647
  2,872
Change in working capital, $m
  -17
  -20
  -23
  -26
  -29
  -32
  -35
  -37
  -40
  -43
  -46
  -49
  -53
  -56
  -59
  -63
  -67
  -70
  -74
  -79
  -83
  -87
  -92
  -97
  -102
  -108
  -113
  -119
  -125
  -132
Cash from operations, $m
  30
  70
  78
  94
  116
  146
  182
  226
  278
  336
  403
  477
  560
  640
  721
  808
  903
  1,006
  1,117
  1,237
  1,365
  1,503
  1,651
  1,809
  1,977
  2,158
  2,350
  2,554
  2,772
  3,004
Maintenance CAPEX, $m
  -350
  -357
  -365
  -374
  -385
  -396
  -409
  -423
  -438
  -455
  -472
  -491
  -511
  -532
  -554
  -578
  -603
  -630
  -659
  -689
  -720
  -754
  -789
  -826
  -865
  -906
  -950
  -995
  -1,043
  -1,094
New CAPEX, $m
  -71
  -82
  -94
  -105
  -117
  -128
  -139
  -151
  -163
  -174
  -187
  -199
  -212
  -225
  -239
  -253
  -268
  -284
  -300
  -316
  -334
  -352
  -371
  -391
  -412
  -434
  -456
  -480
  -505
  -531
Cash from investing activities, $m
  -421
  -439
  -459
  -479
  -502
  -524
  -548
  -574
  -601
  -629
  -659
  -690
  -723
  -757
  -793
  -831
  -871
  -914
  -959
  -1,005
  -1,054
  -1,106
  -1,160
  -1,217
  -1,277
  -1,340
  -1,406
  -1,475
  -1,548
  -1,625
Free cash flow, $m
  -390
  -368
  -380
  -386
  -385
  -379
  -366
  -348
  -323
  -292
  -256
  -212
  -162
  -117
  -73
  -23
  32
  92
  159
  232
  311
  397
  491
  592
  700
  818
  944
  1,079
  1,224
  1,379
Issuance/(repayment) of debt, $m
  -274
  126
  144
  162
  179
  197
  214
  232
  250
  268
  287
  306
  326
  346
  367
  389
  412
  436
  460
  486
  513
  541
  570
  601
  633
  666
  701
  738
  776
  816
Issuance/(repurchase) of shares, $m
  1,038
  632
  638
  638
  632
  620
  602
  578
  548
  512
  166
  116
  60
  8
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
Cash from financing (excl. dividends), $m  
  764
  758
  782
  800
  811
  817
  816
  810
  798
  780
  453
  422
  386
  354
  367
  389
  412
  436
  460
  486
  513
  541
  570
  601
  633
  666
  701
  738
  776
  816
Total cash flow (excl. dividends), $m
  373
  390
  402
  414
  426
  438
  450
  462
  475
  487
  197
  210
  224
  238
  295
  366
  444
  528
  619
  718
  824
  938
  1,061
  1,192
  1,333
  1,484
  1,645
  1,817
  2,000
  2,195
Retained Cash Flow (-), $m
  -1,038
  -632
  -638
  -638
  -632
  -620
  -602
  -578
  -548
  -512
  -166
  -116
  -60
  -38
  -41
  -43
  -46
  -48
  -51
  -54
  -57
  -60
  -63
  -67
  -70
  -74
  -78
  -82
  -86
  -91
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
  53
  54
  56
  57
  59
  61
  62
  65
  67
  69
  72
  75
  78
  81
  85
  88
  92
  96
  101
  105
  110
  115
  120
  126
  132
  138
  145
  152
  159
  167
Cash available for distribution, $m
  -665
  -242
  -236
  -224
  -206
  -182
  -152
  -116
  -73
  -25
  31
  94
  163
  199
  254
  323
  398
  480
  568
  664
  767
  878
  997
  1,126
  1,263
  1,410
  1,567
  1,735
  1,914
  2,104
Discount rate, %
  12.60
  13.23
  13.89
  14.59
  15.32
  16.08
  16.89
  17.73
  18.62
  19.55
  20.52
  21.55
  22.63
  23.76
  24.95
  26.19
  27.50
  28.88
  30.32
  31.84
  33.43
  35.10
  36.86
  38.70
  40.64
  42.67
  44.80
  47.04
  49.39
  51.86
PV of cash for distribution, $m
  -590
  -189
  -160
  -130
  -101
  -74
  -51
  -31
  -16
  -4
  4
  9
  12
  10
  9
  8
  6
  5
  4
  3
  2
  1
  1
  0
  0
  0
  0
  0
  0
  0
Current shareholders' claim on cash, %
  61.5
  54.1
  47.6
  42.1
  37.4
  33.3
  29.9
  27.1
  24.7
  22.7
  22.1
  21.7
  21.5
  21.5
  21.5
  21.5
  21.5
  21.5
  21.5
  21.5
  21.5
  21.5
  21.5
  21.5
  21.5
  21.5
  21.5
  21.5
  21.5
  21.5

Chicago Bridge & Iron Company N.V. provides services to customers in energy infrastructure market. The Company provides services, such as conceptual design, technology, engineering, procurement, fabrication, modularization, construction, commissioning, maintenance, program management and environmental services. Its Engineering and Construction segment provides engineering, procurement, and construction (EPC) services. Its Fabrication Services segment provides fabrication and erection of steel plate structures; fabrication of piping systems and process modules, and manufacturing and distribution of pipe and fittings. The Technology segment provides process technology licenses and associated engineering services, and catalysts, for petrochemical and refining industries, and offers process planning and project development services.

FINANCIAL RATIOS  of  Chicago Bridge&Iron (CBI)

Valuation Ratios
P/E Ratio -5.2
Price to Sales 0.2
Price to Book 1.2
Price to Tangible Book
Price to Cash Flow 2.5
Price to Free Cash Flow 2.7
Growth Rates
Sales Growth Rate -17.4%
Sales - 3 Yr. Growth Rate %
EPS Growth Rate %
EPS - 3 Yr. Growth Rate %
Capital Spending Gr. Rate -34.2%
Cap. Spend. - 3 Yr. Gr. Rate -19.2%
Financial Strength
Quick Ratio 1
Current Ratio 0.3
LT Debt to Equity 91%
Total Debt to Equity 155.5%
Interest Coverage -1
Management Effectiveness
Return On Assets -2.5%
Ret/ On Assets - 3 Yr. Avg. -0.3%
Return On Total Capital -7.6%
Ret/ On T. Cap. - 3 Yr. Avg. -2.1%
Return On Equity -18.3%
Return On Equity - 3 Yr. Avg. -6%
Asset Turnover 1.3
Profitability Ratios
Gross Margin 9.6%
Gross Margin - 3 Yr. Avg. 10.9%
EBITDA Margin -0.1%
EBITDA Margin - 3 Yr. Avg. 2.3%
Operating Margin -1.3%
Oper. Margin - 3 Yr. Avg. 1%
Pre-Tax Margin -2.2%
Pre-Tax Margin - 3 Yr. Avg. 0.3%
Net Profit Margin -2.9%
Net Profit Margin - 3 Yr. Avg. -0.9%
Effective Tax Rate -1.3%
Eff/ Tax Rate - 3 Yr. Avg. 14.8%
Payout Ratio -9.3%

CBI stock valuation input parameters

Revenue. Company's revenue (or sales) is always the starting point of any cash flow forecast. In the CBI stock intrinsic value calculation we used $6673 million for the last fiscal year's total revenue generated by Chicago Bridge&Iron. The default revenue input number comes from 2017 income statement of Chicago Bridge&Iron. 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 CBI 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 12.6%, whose default value for CBI is calculated based on our internal credit rating of Chicago Bridge&Iron, 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 Chicago Bridge&Iron.
    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 CBI stock the variable cost ratio is equal to 61.2%.

Fixed operating expenses is just that - expenses that are not dependant on the volume of production. They are set to $2995 million in the base year in the intrinsic value calculation for CBI 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 10.3% for Chicago Bridge&Iron.

Corporate tax rate of 27% is the nominal tax rate for Chicago Bridge&Iron. 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 CBI stock is equal to 0.8%.

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 CBI are equal to 52.4%.

Life of production assets of 10 years is the average useful life of capital assets used in Chicago Bridge&Iron 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 CBI is equal to -13%. 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 - $218 million for Chicago Bridge&Iron - 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 101 million for Chicago Bridge&Iron 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 Chicago Bridge&Iron at the current share price and the inputted number of shares is $1.7 billion.

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