Intrinsic value of Clean Harbors, Inc. - CLH

Previous Close

$68.71

  Intrinsic Value

$30.31

stock screener

  Rating & Target

str. sell

-56%

Previous close

$68.71

 
Intrinsic value

$30.31

 
Up/down potential

-56%

 
Rating

str. sell

We calculate the intrinsic value of CLH 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 3.8

 

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, %
  14.80
  13.82
  12.94
  12.14
  11.43
  10.79
  10.21
  9.69
  9.22
  8.80
  8.42
  8.08
  7.77
  7.49
  7.24
  7.02
  6.82
  6.63
  6.47
  6.32
  6.19
  6.07
  5.97
  5.87
  5.78
  5.70
  5.63
  5.57
  5.51
  5.46
Revenue, $m
  3,788
  4,312
  4,870
  5,461
  6,085
  6,742
  7,430
  8,150
  8,901
  9,684
  10,499
  11,347
  12,229
  13,145
  14,097
  15,086
  16,114
  17,183
  18,295
  19,452
  20,656
  21,911
  23,218
  24,580
  26,001
  27,484
  29,033
  30,650
  32,339
  34,106
Variable operating expenses, $m
  3,520
  3,994
  4,498
  5,033
  5,597
  6,190
  6,813
  7,463
  8,143
  8,850
  9,492
  10,258
  11,055
  11,883
  12,744
  13,638
  14,568
  15,534
  16,539
  17,585
  18,674
  19,808
  20,989
  22,221
  23,506
  24,847
  26,246
  27,708
  29,236
  30,832
Fixed operating expenses, $m
  40
  41
  42
  43
  43
  44
  45
  46
  47
  48
  50
  51
  52
  53
  54
  55
  56
  58
  59
  60
  62
  63
  64
  66
  67
  69
  70
  72
  73
  75
Total operating expenses, $m
  3,560
  4,035
  4,540
  5,076
  5,640
  6,234
  6,858
  7,509
  8,190
  8,898
  9,542
  10,309
  11,107
  11,936
  12,798
  13,693
  14,624
  15,592
  16,598
  17,645
  18,736
  19,871
  21,053
  22,287
  23,573
  24,916
  26,316
  27,780
  29,309
  30,907
Operating income, $m
  228
  277
  330
  386
  445
  507
  572
  640
  711
  785
  958
  1,038
  1,122
  1,209
  1,299
  1,393
  1,490
  1,591
  1,697
  1,807
  1,921
  2,040
  2,164
  2,293
  2,428
  2,569
  2,716
  2,870
  3,030
  3,198
EBITDA, $m
  600
  688
  782
  881
  985
  1,095
  1,210
  1,331
  1,457
  1,588
  1,725
  1,867
  2,015
  2,169
  2,329
  2,495
  2,667
  2,847
  3,033
  3,228
  3,430
  3,641
  3,860
  4,089
  4,328
  4,577
  4,837
  5,109
  5,393
  5,690
Interest expense (income), $m
  89
  85
  105
  127
  151
  176
  202
  229
  258
  289
  320
  353
  387
  423
  460
  498
  538
  580
  623
  668
  715
  763
  814
  867
  922
  979
  1,039
  1,101
  1,166
  1,234
  1,305
Earnings before tax, $m
  143
  172
  203
  235
  269
  305
  343
  382
  423
  465
  605
  651
  699
  749
  800
  854
  910
  968
  1,029
  1,092
  1,157
  1,226
  1,297
  1,372
  1,449
  1,530
  1,615
  1,704
  1,796
  1,893
Tax expense, $m
  39
  46
  55
  63
  73
  82
  92
  103
  114
  126
  163
  176
  189
  202
  216
  231
  246
  261
  278
  295
  312
  331
  350
  370
  391
  413
  436
  460
  485
  511
Net income, $m
  105
  126
  148
  172
  197
  223
  250
  279
  308
  340
  442
  475
  510
  546
  584
  623
  664
  707
  751
  797
  845
  895
  947
  1,001
  1,058
  1,117
  1,179
  1,244
  1,311
  1,382

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
  4,290
  4,883
  5,515
  6,185
  6,892
  7,635
  8,415
  9,230
  10,081
  10,967
  11,890
  12,851
  13,849
  14,886
  15,964
  17,085
  18,249
  19,460
  20,719
  22,029
  23,393
  24,814
  26,294
  27,837
  29,447
  31,126
  32,879
  34,711
  36,624
  38,625
Adjusted assets (=assets-cash), $m
  4,290
  4,883
  5,515
  6,185
  6,892
  7,635
  8,415
  9,230
  10,081
  10,967
  11,890
  12,851
  13,849
  14,886
  15,964
  17,085
  18,249
  19,460
  20,719
  22,029
  23,393
  24,814
  26,294
  27,837
  29,447
  31,126
  32,879
  34,711
  36,624
  38,625
Revenue / Adjusted assets
  0.883
  0.883
  0.883
  0.883
  0.883
  0.883
  0.883
  0.883
  0.883
  0.883
  0.883
  0.883
  0.883
  0.883
  0.883
  0.883
  0.883
  0.883
  0.883
  0.883
  0.883
  0.883
  0.883
  0.883
  0.883
  0.883
  0.883
  0.883
  0.883
  0.883
Average production assets, $m
  2,353
  2,678
  3,024
  3,391
  3,779
  4,187
  4,614
  5,061
  5,528
  6,014
  6,520
  7,047
  7,594
  8,163
  8,754
  9,368
  10,007
  10,671
  11,361
  12,080
  12,828
  13,607
  14,418
  15,264
  16,147
  17,068
  18,029
  19,033
  20,083
  21,180
Working capital, $m
  375
  427
  482
  541
  602
  667
  736
  807
  881
  959
  1,039
  1,123
  1,211
  1,301
  1,396
  1,493
  1,595
  1,701
  1,811
  1,926
  2,045
  2,169
  2,299
  2,433
  2,574
  2,721
  2,874
  3,034
  3,202
  3,376
Total debt, $m
  1,951
  2,359
  2,793
  3,253
  3,739
  4,249
  4,785
  5,345
  5,929
  6,539
  7,173
  7,832
  8,518
  9,231
  9,972
  10,741
  11,541
  12,373
  13,238
  14,138
  15,075
  16,051
  17,068
  18,128
  19,234
  20,388
  21,592
  22,850
  24,165
  25,539
Total liabilities, $m
  2,947
  3,355
  3,789
  4,249
  4,735
  5,245
  5,781
  6,341
  6,925
  7,535
  8,169
  8,828
  9,514
  10,227
  10,968
  11,737
  12,537
  13,369
  14,234
  15,134
  16,071
  17,047
  18,064
  19,124
  20,230
  21,384
  22,588
  23,846
  25,161
  26,535
Total equity, $m
  1,343
  1,528
  1,726
  1,936
  2,157
  2,390
  2,634
  2,889
  3,155
  3,433
  3,722
  4,022
  4,335
  4,659
  4,997
  5,348
  5,712
  6,091
  6,485
  6,895
  7,322
  7,767
  8,230
  8,713
  9,217
  9,742
  10,291
  10,864
  11,463
  12,090
Total liabilities and equity, $m
  4,290
  4,883
  5,515
  6,185
  6,892
  7,635
  8,415
  9,230
  10,080
  10,968
  11,891
  12,850
  13,849
  14,886
  15,965
  17,085
  18,249
  19,460
  20,719
  22,029
  23,393
  24,814
  26,294
  27,837
  29,447
  31,126
  32,879
  34,710
  36,624
  38,625
Debt-to-equity ratio
  1.450
  1.540
  1.620
  1.680
  1.730
  1.780
  1.820
  1.850
  1.880
  1.900
  1.930
  1.950
  1.970
  1.980
  2.000
  2.010
  2.020
  2.030
  2.040
  2.050
  2.060
  2.070
  2.070
  2.080
  2.090
  2.090
  2.100
  2.100
  2.110
  2.110
Adjusted equity ratio
  0.313
  0.313
  0.313
  0.313
  0.313
  0.313
  0.313
  0.313
  0.313
  0.313
  0.313
  0.313
  0.313
  0.313
  0.313
  0.313
  0.313
  0.313
  0.313
  0.313
  0.313
  0.313
  0.313
  0.313
  0.313
  0.313
  0.313
  0.313
  0.313
  0.313

CASH FLOW

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Net income, $m
  105
  126
  148
  172
  197
  223
  250
  279
  308
  340
  442
  475
  510
  546
  584
  623
  664
  707
  751
  797
  845
  895
  947
  1,001
  1,058
  1,117
  1,179
  1,244
  1,311
  1,382
Depreciation, amort., depletion, $m
  372
  411
  451
  495
  540
  588
  638
  691
  746
  803
  767
  829
  893
  960
  1,030
  1,102
  1,177
  1,255
  1,337
  1,421
  1,509
  1,601
  1,696
  1,796
  1,900
  2,008
  2,121
  2,239
  2,363
  2,492
Funds from operations, $m
  477
  536
  599
  666
  737
  811
  889
  970
  1,054
  1,143
  1,209
  1,304
  1,404
  1,507
  1,614
  1,726
  1,842
  1,962
  2,088
  2,218
  2,354
  2,496
  2,643
  2,797
  2,958
  3,125
  3,300
  3,483
  3,674
  3,874
Change in working capital, $m
  48
  52
  55
  59
  62
  65
  68
  71
  74
  78
  81
  84
  87
  91
  94
  98
  102
  106
  110
  115
  119
  124
  129
  135
  141
  147
  153
  160
  167
  175
Cash from operations, $m
  429
  484
  544
  608
  675
  746
  820
  898
  980
  1,065
  1,128
  1,220
  1,316
  1,416
  1,520
  1,628
  1,740
  1,856
  1,977
  2,104
  2,235
  2,371
  2,514
  2,662
  2,817
  2,978
  3,147
  3,323
  3,507
  3,699
Maintenance CAPEX, $m
  -241
  -277
  -315
  -356
  -399
  -445
  -493
  -543
  -595
  -650
  -708
  -767
  -829
  -893
  -960
  -1,030
  -1,102
  -1,177
  -1,255
  -1,337
  -1,421
  -1,509
  -1,601
  -1,696
  -1,796
  -1,900
  -2,008
  -2,121
  -2,239
  -2,363
New CAPEX, $m
  -302
  -325
  -346
  -367
  -388
  -408
  -427
  -447
  -467
  -486
  -506
  -527
  -547
  -569
  -591
  -614
  -639
  -664
  -690
  -718
  -748
  -779
  -812
  -846
  -883
  -921
  -961
  -1,004
  -1,049
  -1,097
Cash from investing activities, $m
  -543
  -602
  -661
  -723
  -787
  -853
  -920
  -990
  -1,062
  -1,136
  -1,214
  -1,294
  -1,376
  -1,462
  -1,551
  -1,644
  -1,741
  -1,841
  -1,945
  -2,055
  -2,169
  -2,288
  -2,413
  -2,542
  -2,679
  -2,821
  -2,969
  -3,125
  -3,288
  -3,460
Free cash flow, $m
  -115
  -117
  -117
  -115
  -112
  -106
  -100
  -91
  -82
  -71
  -86
  -73
  -60
  -46
  -32
  -17
  -1
  15
  32
  48
  66
  83
  101
  120
  139
  158
  177
  198
  218
  239
Issuance/(repayment) of debt, $m
  379
  407
  434
  460
  486
  511
  535
  560
  585
  609
  634
  660
  686
  713
  741
  770
  800
  832
  865
  900
  937
  976
  1,017
  1,060
  1,106
  1,154
  1,205
  1,258
  1,315
  1,374
Issuance/(repurchase) of shares, $m
  69
  60
  50
  38
  25
  10
  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  
  448
  467
  484
  498
  511
  521
  535
  560
  585
  609
  634
  660
  686
  713
  741
  770
  800
  832
  865
  900
  937
  976
  1,017
  1,060
  1,106
  1,154
  1,205
  1,258
  1,315
  1,374
Total cash flow (excl. dividends), $m
  333
  350
  366
  383
  399
  414
  436
  469
  503
  538
  548
  586
  626
  667
  709
  753
  799
  847
  897
  949
  1,003
  1,059
  1,118
  1,180
  1,244
  1,312
  1,382
  1,456
  1,533
  1,614
Retained Cash Flow (-), $m
  -173
  -186
  -198
  -210
  -221
  -233
  -244
  -255
  -266
  -278
  -289
  -301
  -312
  -325
  -337
  -351
  -364
  -379
  -394
  -410
  -427
  -445
  -463
  -483
  -504
  -526
  -549
  -573
  -599
  -626
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
  160
  164
  169
  173
  177
  182
  192
  213
  236
  260
  260
  286
  313
  342
  372
  402
  435
  468
  503
  538
  576
  615
  655
  697
  740
  786
  833
  882
  934
  988
Discount rate, %
  6.80
  7.14
  7.50
  7.87
  8.27
  8.68
  9.11
  9.57
  10.05
  10.55
  11.08
  11.63
  12.21
  12.82
  13.46
  14.14
  14.84
  15.59
  16.37
  17.18
  18.04
  18.94
  19.89
  20.89
  21.93
  23.03
  24.18
  25.39
  26.66
  27.99
PV of cash for distribution, $m
  150
  143
  136
  128
  119
  110
  104
  103
  100
  95
  82
  76
  70
  63
  56
  49
  41
  35
  28
  23
  18
  14
  10
  7
  5
  4
  2
  2
  1
  1
Current shareholders' claim on cash, %
  98.2
  96.9
  96.0
  95.3
  95.0
  94.8
  94.8
  94.8
  94.8
  94.8
  94.8
  94.8
  94.8
  94.8
  94.8
  94.8
  94.8
  94.8
  94.8
  94.8
  94.8
  94.8
  94.8
  94.8
  94.8
  94.8
  94.8
  94.8
  94.8
  94.8

Clean Harbors, Inc. is a provider of environmental, energy and industrial services throughout North America. The Company is also a re-refiner and recycler of used oil in the world and a provider of parts cleaning and related environmental services to commercial, industrial and automotive customers in North America. The Company operates in six segments: Technical Services, Industrial Services, Field Services, Safety-Kleen, Oil and Gas Field Services, and Lodging Services. The Company is also a service provider in the recovery and decontamination of pollutants. The Company provides services to protect the ozone layer from the effects of chlorofluorocarbons (CFCs). It offers brands, such as Performance Plus brand and green brand EcoPower. The Company also offers CleanPack services, which include the collection, identification and categorization, packaging, transportation and disposal of laboratory chemicals and household hazardous waste. It also provides hydro excavation services.

FINANCIAL RATIOS  of  Clean Harbors, Inc. (CLH)

Valuation Ratios
P/E Ratio -98.4
Price to Sales 1.4
Price to Book 3.6
Price to Tangible Book
Price to Cash Flow 15.1
Price to Free Cash Flow 103.6
Growth Rates
Sales Growth Rate -15.9%
Sales - 3 Yr. Growth Rate %
EPS Growth Rate %
EPS - 3 Yr. Growth Rate %
Capital Spending Gr. Rate -15.3%
Cap. Spend. - 3 Yr. Gr. Rate -5%
Financial Strength
Quick Ratio NaN
Current Ratio 0
LT Debt to Equity 150.6%
Total Debt to Equity 150.6%
Interest Coverage 1
Management Effectiveness
Return On Assets -12.2%
Ret/ On Assets - 3 Yr. Avg. -4.1%
Return On Total Capital -1.5%
Ret/ On T. Cap. - 3 Yr. Avg. -0.3%
Return On Equity -3.7%
Return On Equity - 3 Yr. Avg. -0.7%
Asset Turnover 0.8
Profitability Ratios
Gross Margin 29.8%
Gross Margin - 3 Yr. Avg. 28.7%
EBITDA Margin 14%
EBITDA Margin - 3 Yr. Avg. 13.1%
Operating Margin 3.1%
Oper. Margin - 3 Yr. Avg. 4%
Pre-Tax Margin 0.3%
Pre-Tax Margin - 3 Yr. Avg. 1.6%
Net Profit Margin -1.5%
Net Profit Margin - 3 Yr. Avg. -0.3%
Effective Tax Rate 544.4%
Eff/ Tax Rate - 3 Yr. Avg. 258.7%
Payout Ratio 0%

CLH stock valuation input parameters

Revenue. Company's revenue (or sales) is always the starting point of any cash flow forecast. In the CLH stock intrinsic value calculation we used $3300 million for the last fiscal year's total revenue generated by Clean Harbors, Inc.. The default revenue input number comes from 0001 income statement of Clean Harbors, 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 CLH stock valuation model: a) initial revenue growth rate of 14.8% 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 6.8%, whose default value for CLH is calculated based on our internal credit rating of Clean Harbors, 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 Clean Harbors, 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 CLH stock the variable cost ratio is equal to 93.3%.

Fixed operating expenses is just that - expenses that are not dependant on the volume of production. They are set to $39 million in the base year in the intrinsic value calculation for CLH 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 Clean Harbors, Inc..

Corporate tax rate of 27% is the nominal tax rate for Clean Harbors, 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 CLH 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 CLH are equal to 62.1%.

Life of production assets of 8.5 years is the average useful life of capital assets used in Clean Harbors, 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 CLH is equal to 9.9%. 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 - $1169.756 million for Clean Harbors, 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 55.863 million for Clean Harbors, 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 Clean Harbors, Inc. at the current share price and the inputted number of shares is $3.8 billion.

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