Intrinsic value of Celadon Group - CGI

Previous Close

$3.45

  Intrinsic Value

$4.25

stock screener

  Rating & Target

buy

+23%

Previous close

$3.45

 
Intrinsic value

$4.25

 
Up/down potential

+23%

 
Rating

buy

We calculate the intrinsic value of CGI 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 2016), $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 0.1

 

FINANCIAL STATEMENTS FORECAST and PRESENT VALUE CALCULATION

Fiscal year
   2017
   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

INCOME STATEMENT

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Revenue growth rate, %
  18.30
  16.97
  15.77
  14.70
  13.73
  12.85
  12.07
  11.36
  10.73
  10.15
  9.64
  9.17
  8.76
  8.38
  8.04
  7.74
  7.46
  7.22
  7.00
  6.80
  6.62
  6.46
  6.31
  6.18
  6.06
  5.95
  5.86
  5.77
  5.70
  5.63
Revenue, $m
  1,260
  1,474
  1,706
  1,957
  2,225
  2,512
  2,815
  3,134
  3,471
  3,823
  4,191
  4,576
  4,977
  5,394
  5,827
  6,278
  6,747
  7,234
  7,740
  8,266
  8,813
  9,382
  9,974
  10,590
  11,232
  11,901
  12,598
  13,326
  14,085
  14,877
Variable operating expenses, $m
  1,157
  1,352
  1,564
  1,793
  2,038
  2,300
  2,576
  2,868
  3,175
  3,497
  3,827
  4,179
  4,544
  4,925
  5,321
  5,733
  6,161
  6,606
  7,068
  7,548
  8,048
  8,567
  9,108
  9,671
  10,257
  10,868
  11,505
  12,169
  12,862
  13,586
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
  1,157
  1,352
  1,564
  1,793
  2,038
  2,300
  2,576
  2,868
  3,175
  3,497
  3,827
  4,179
  4,544
  4,925
  5,321
  5,733
  6,161
  6,606
  7,068
  7,548
  8,048
  8,567
  9,108
  9,671
  10,257
  10,868
  11,505
  12,169
  12,862
  13,586
Operating income, $m
  103
  122
  142
  164
  187
  212
  238
  266
  295
  326
  364
  397
  432
  468
  506
  545
  586
  628
  672
  718
  765
  815
  866
  919
  975
  1,033
  1,094
  1,157
  1,223
  1,292
EBITDA, $m
  207
  242
  280
  321
  365
  412
  461
  514
  569
  627
  687
  750
  816
  884
  955
  1,029
  1,106
  1,186
  1,269
  1,355
  1,445
  1,538
  1,635
  1,736
  1,841
  1,951
  2,065
  2,184
  2,309
  2,439
Interest expense (income), $m
  14
  24
  31
  39
  48
  57
  67
  77
  88
  100
  112
  125
  139
  153
  168
  183
  199
  215
  232
  250
  269
  288
  308
  329
  351
  373
  397
  421
  447
  473
  501
Earnings before tax, $m
  79
  90
  103
  116
  130
  145
  161
  178
  195
  213
  239
  258
  279
  301
  323
  346
  371
  396
  422
  449
  477
  507
  537
  569
  602
  637
  673
  710
  750
  791
Tax expense, $m
  21
  24
  28
  31
  35
  39
  43
  48
  53
  58
  64
  70
  75
  81
  87
  94
  100
  107
  114
  121
  129
  137
  145
  154
  163
  172
  182
  192
  202
  213
Net income, $m
  58
  66
  75
  85
  95
  106
  117
  130
  142
  156
  174
  189
  204
  220
  236
  253
  271
  289
  308
  328
  348
  370
  392
  415
  440
  465
  491
  519
  547
  577

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
  1,304
  1,526
  1,766
  2,026
  2,304
  2,600
  2,914
  3,245
  3,593
  3,957
  4,339
  4,737
  5,152
  5,583
  6,033
  6,499
  6,984
  7,489
  8,013
  8,557
  9,123
  9,712
  10,325
  10,963
  11,628
  12,320
  13,042
  13,795
  14,580
  15,401
Adjusted assets (=assets-cash), $m
  1,304
  1,526
  1,766
  2,026
  2,304
  2,600
  2,914
  3,245
  3,593
  3,957
  4,339
  4,737
  5,152
  5,583
  6,033
  6,499
  6,984
  7,489
  8,013
  8,557
  9,123
  9,712
  10,325
  10,963
  11,628
  12,320
  13,042
  13,795
  14,580
  15,401
Revenue / Adjusted assets
  0.966
  0.966
  0.966
  0.966
  0.966
  0.966
  0.966
  0.966
  0.966
  0.966
  0.966
  0.966
  0.966
  0.966
  0.966
  0.966
  0.966
  0.966
  0.966
  0.966
  0.966
  0.966
  0.966
  0.966
  0.966
  0.966
  0.966
  0.966
  0.966
  0.966
Average production assets, $m
  971
  1,136
  1,315
  1,509
  1,716
  1,936
  2,170
  2,417
  2,676
  2,947
  3,232
  3,528
  3,837
  4,158
  4,493
  4,841
  5,202
  5,577
  5,968
  6,373
  6,795
  7,234
  7,690
  8,165
  8,660
  9,176
  9,713
  10,274
  10,859
  11,470
Working capital, $m
  -31
  -37
  -43
  -49
  -56
  -63
  -70
  -78
  -87
  -96
  -105
  -114
  -124
  -135
  -146
  -157
  -169
  -181
  -194
  -207
  -220
  -235
  -249
  -265
  -281
  -298
  -315
  -333
  -352
  -372
Total debt, $m
  583
  728
  885
  1,055
  1,238
  1,431
  1,637
  1,854
  2,082
  2,321
  2,570
  2,831
  3,103
  3,386
  3,680
  3,986
  4,303
  4,634
  4,977
  5,333
  5,704
  6,090
  6,491
  6,909
  7,345
  7,798
  8,271
  8,764
  9,279
  9,816
Total liabilities, $m
  854
  999
  1,157
  1,327
  1,509
  1,703
  1,908
  2,125
  2,353
  2,592
  2,842
  3,103
  3,374
  3,657
  3,951
  4,257
  4,575
  4,905
  5,248
  5,605
  5,976
  6,362
  6,763
  7,181
  7,616
  8,070
  8,542
  9,036
  9,550
  10,088
Total equity, $m
  450
  526
  609
  699
  795
  897
  1,005
  1,119
  1,239
  1,365
  1,497
  1,634
  1,777
  1,926
  2,081
  2,242
  2,410
  2,584
  2,764
  2,952
  3,148
  3,351
  3,562
  3,782
  4,011
  4,250
  4,499
  4,759
  5,030
  5,313
Total liabilities and equity, $m
  1,304
  1,525
  1,766
  2,026
  2,304
  2,600
  2,913
  3,244
  3,592
  3,957
  4,339
  4,737
  5,151
  5,583
  6,032
  6,499
  6,985
  7,489
  8,012
  8,557
  9,124
  9,713
  10,325
  10,963
  11,627
  12,320
  13,041
  13,795
  14,580
  15,401
Debt-to-equity ratio
  1.300
  1.380
  1.450
  1.510
  1.560
  1.600
  1.630
  1.660
  1.680
  1.700
  1.720
  1.730
  1.750
  1.760
  1.770
  1.780
  1.790
  1.790
  1.800
  1.810
  1.810
  1.820
  1.820
  1.830
  1.830
  1.830
  1.840
  1.840
  1.840
  1.850
Adjusted equity ratio
  0.345
  0.345
  0.345
  0.345
  0.345
  0.345
  0.345
  0.345
  0.345
  0.345
  0.345
  0.345
  0.345
  0.345
  0.345
  0.345
  0.345
  0.345
  0.345
  0.345
  0.345
  0.345
  0.345
  0.345
  0.345
  0.345
  0.345
  0.345
  0.345
  0.345

CASH FLOW

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Net income, $m
  58
  66
  75
  85
  95
  106
  117
  130
  142
  156
  174
  189
  204
  220
  236
  253
  271
  289
  308
  328
  348
  370
  392
  415
  440
  465
  491
  519
  547
  577
Depreciation, amort., depletion, $m
  103
  120
  138
  157
  178
  200
  223
  248
  274
  301
  323
  353
  384
  416
  449
  484
  520
  558
  597
  637
  679
  723
  769
  817
  866
  918
  971
  1,027
  1,086
  1,147
Funds from operations, $m
  161
  186
  213
  242
  273
  306
  341
  377
  416
  457
  497
  541
  587
  635
  685
  737
  791
  847
  905
  965
  1,028
  1,093
  1,161
  1,232
  1,306
  1,382
  1,462
  1,546
  1,633
  1,724
Change in working capital, $m
  -5
  -5
  -6
  -6
  -7
  -7
  -8
  -8
  -8
  -9
  -9
  -10
  -10
  -10
  -11
  -11
  -12
  -12
  -13
  -13
  -14
  -14
  -15
  -15
  -16
  -17
  -17
  -18
  -19
  -20
Cash from operations, $m
  166
  191
  218
  248
  279
  313
  348
  385
  425
  465
  507
  551
  598
  646
  696
  748
  802
  859
  917
  978
  1,041
  1,107
  1,176
  1,247
  1,322
  1,399
  1,480
  1,564
  1,652
  1,744
Maintenance CAPEX, $m
  -82
  -97
  -114
  -132
  -151
  -172
  -194
  -217
  -242
  -268
  -295
  -323
  -353
  -384
  -416
  -449
  -484
  -520
  -558
  -597
  -637
  -679
  -723
  -769
  -817
  -866
  -918
  -971
  -1,027
  -1,086
New CAPEX, $m
  -150
  -165
  -179
  -193
  -207
  -221
  -234
  -247
  -259
  -272
  -284
  -296
  -309
  -322
  -334
  -348
  -361
  -375
  -390
  -406
  -422
  -439
  -456
  -475
  -495
  -516
  -538
  -561
  -585
  -611
Cash from investing activities, $m
  -232
  -262
  -293
  -325
  -358
  -393
  -428
  -464
  -501
  -540
  -579
  -619
  -662
  -706
  -750
  -797
  -845
  -895
  -948
  -1,003
  -1,059
  -1,118
  -1,179
  -1,244
  -1,312
  -1,382
  -1,456
  -1,532
  -1,612
  -1,697
Free cash flow, $m
  -67
  -71
  -74
  -77
  -79
  -79
  -79
  -78
  -76
  -74
  -72
  -69
  -64
  -59
  -54
  -49
  -43
  -37
  -31
  -24
  -18
  -11
  -4
  3
  10
  17
  25
  32
  39
  47
Issuance/(repayment) of debt, $m
  132
  145
  158
  170
  182
  194
  206
  217
  228
  239
  250
  261
  272
  283
  294
  306
  318
  330
  343
  357
  371
  386
  401
  418
  435
  454
  473
  493
  515
  537
Issuance/(repurchase) of shares, $m
  11
  10
  8
  5
  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
Cash from financing (excl. dividends), $m  
  143
  155
  166
  175
  183
  194
  206
  217
  228
  239
  250
  261
  272
  283
  294
  306
  318
  330
  343
  357
  371
  386
  401
  418
  435
  454
  473
  493
  515
  537
Total cash flow (excl. dividends), $m
  77
  85
  91
  98
  105
  115
  126
  139
  152
  165
  178
  192
  207
  223
  240
  257
  275
  293
  313
  333
  353
  375
  398
  421
  445
  471
  497
  525
  554
  584
Retained Cash Flow (-), $m
  -69
  -76
  -83
  -90
  -96
  -102
  -108
  -114
  -120
  -126
  -132
  -137
  -143
  -149
  -155
  -161
  -167
  -174
  -181
  -188
  -195
  -203
  -211
  -220
  -229
  -239
  -249
  -260
  -271
  -283
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
  3
  4
  4
  5
  6
  7
  8
  8
  9
  10
  11
  13
  14
  15
  16
  17
  19
  20
  22
  23
  25
  26
  28
  30
  32
  34
  36
  38
  40
  42
Cash available for distribution, $m
  8
  8
  8
  8
  9
  13
  18
  25
  32
  39
  46
  55
  64
  74
  85
  96
  107
  119
  132
  145
  158
  172
  186
  201
  216
  232
  248
  265
  283
  301
Discount rate, %
  9.70
  10.19
  10.69
  11.23
  11.79
  12.38
  13.00
  13.65
  14.33
  15.05
  15.80
  16.59
  17.42
  18.29
  19.21
  20.17
  21.17
  22.23
  23.34
  24.51
  25.74
  27.02
  28.38
  29.79
  31.28
  32.85
  34.49
  36.21
  38.03
  39.93
PV of cash for distribution, $m
  7
  7
  6
  6
  5
  6
  8
  9
  9
  10
  9
  9
  8
  7
  6
  5
  4
  3
  2
  2
  1
  1
  1
  0
  0
  0
  0
  0
  0
  0
Current shareholders' claim on cash, %
  95.9
  92.8
  90.8
  89.8
  89.6
  89.6
  89.6
  89.6
  89.6
  89.6
  89.6
  89.6
  89.6
  89.6
  89.6
  89.6
  89.6
  89.6
  89.6
  89.6
  89.6
  89.6
  89.6
  89.6
  89.6
  89.6
  89.6
  89.6
  89.6
  89.6

Celadon Group, Inc. (Celadon) is a truckload freight transportation provider. The Company's segments are asset-based, asset-light, and equipment leasing and services. Its services involve point-to-point shipping for its customers within the United States, between the United States and Mexico, and between the United States and Canada. The Company's primary asset-based services include the United States domestic dry van and refrigerated; cross-border service between the United States and each of Mexico and Canada; intra-Mexico and intra-Canada service; contract service; regional and specialized short haul service, and rail intermodal service. The Company's primary asset-light services include freight brokerage, warehousing, less-than truckload consolidation and supply chain logistics services.

FINANCIAL RATIOS  of  Celadon Group (CGI)

Valuation Ratios
P/E Ratio 3.9
Price to Sales 0.1
Price to Book 0.3
Price to Tangible Book
Price to Cash Flow -19.5
Price to Free Cash Flow -1
Growth Rates
Sales Growth Rate 18.2%
Sales - 3 Yr. Growth Rate %
EPS Growth Rate %
EPS - 3 Yr. Growth Rate %
Capital Spending Gr. Rate -25.4%
Cap. Spend. - 3 Yr. Gr. Rate -12.3%
Financial Strength
Quick Ratio 0
Current Ratio 0.4
LT Debt to Equity 105%
Total Debt to Equity 118.4%
Interest Coverage 4
Management Effectiveness
Return On Assets 3%
Ret/ On Assets - 3 Yr. Avg. 4.2%
Return On Total Capital 2.8%
Ret/ On T. Cap. - 3 Yr. Avg. 4.6%
Return On Equity 6.7%
Return On Equity - 3 Yr. Avg. 10.4%
Asset Turnover 0.9
Profitability Ratios
Gross Margin 90.3%
Gross Margin - 3 Yr. Avg. 83.9%
EBITDA Margin 12.4%
EBITDA Margin - 3 Yr. Avg. 14.7%
Operating Margin 4.9%
Oper. Margin - 3 Yr. Avg. 5.8%
Pre-Tax Margin 3.6%
Pre-Tax Margin - 3 Yr. Avg. 5.5%
Net Profit Margin 2.3%
Net Profit Margin - 3 Yr. Avg. 3.5%
Effective Tax Rate 34.2%
Eff/ Tax Rate - 3 Yr. Avg. 36.1%
Payout Ratio 8%

CGI stock valuation input parameters

Revenue. Company's revenue (or sales) is always the starting point of any cash flow forecast. In the CGI stock intrinsic value calculation we used $1065 million for the last fiscal year's total revenue generated by Celadon Group. The default revenue input number comes from 2016 income statement of Celadon Group. 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 CGI stock valuation model: a) initial revenue growth rate of 18.3% 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 9.7%, whose default value for CGI is calculated based on our internal credit rating of Celadon Group, 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 Celadon Group.
    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 CGI stock the variable cost ratio is equal to 91.9%.

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 CGI 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 Celadon Group.

Corporate tax rate of 27% is the nominal tax rate for Celadon Group. 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 CGI stock is equal to 0.3%.

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 CGI are equal to 77.1%.

Life of production assets of 10 years is the average useful life of capital assets used in Celadon Group 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 CGI is equal to -2.5%. 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 - $381 million for Celadon Group - 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 28 million for Celadon Group 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 Celadon Group at the current share price and the inputted number of shares is $0.1 billion.

RELATED COMPANIES Price Int.Val. Rating
RRTS Roadrunner Tra 1.89 12.62  str.buy
CVTI Covenant Trans 30.28 4.10  str.sell
KNX Knight-Swift T 32.77 2.05  str.sell
ULH Universal Logi 35.80 25.96  buy
MRTN Marten Transpo 22.75 2.39  str.sell
WERN Werner Enterpr 36.95 10.46  str.sell
USAK USA Truck 21.14 5.90  str.sell
PTSI P.A.M. Transpo 62.88 7.27  str.sell
HTLD Heartland Expr 19.65 6.44  str.sell
Follow us on:   twitter   twitter   twitter   twitter

ASSET ALLOCATION

About X-FIN       Site news       Privacy policy       Terms of use       FAQ

Copyright © X-FIN.com 2005-2018. All rigths reserved.