Intrinsic value of Costamare Inc. - CMRE

Previous Close

$5.71

  Intrinsic Value

$2.99

stock screener

  Rating & Target

sell

-48%

Previous close

$5.71

 
Intrinsic value

$2.99

 
Up/down potential

-48%

 
Rating

sell

We calculate the intrinsic value of CMRE 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 0.6

 

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, %
  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
  388
  397
  407
  418
  431
  445
  460
  476
  494
  513
  533
  555
  578
  602
  628
  656
  685
  716
  748
  783
  819
  857
  898
  940
  985
  1,032
  1,082
  1,134
  1,189
  1,247
Variable operating expenses, $m
  147
  150
  154
  158
  163
  169
  174
  181
  187
  194
  202
  210
  219
  228
  238
  249
  260
  271
  284
  297
  310
  325
  340
  356
  373
  391
  410
  430
  451
  472
Fixed operating expenses, $m
  125
  127
  130
  133
  136
  139
  142
  145
  148
  152
  155
  158
  162
  165
  169
  173
  177
  180
  184
  189
  193
  197
  201
  206
  210
  215
  220
  224
  229
  234
Total operating expenses, $m
  272
  277
  284
  291
  299
  308
  316
  326
  335
  346
  357
  368
  381
  393
  407
  422
  437
  451
  468
  486
  503
  522
  541
  562
  583
  606
  630
  654
  680
  706
Operating income, $m
  116
  119
  122
  127
  132
  137
  144
  151
  158
  167
  176
  186
  197
  209
  221
  234
  249
  264
  280
  298
  316
  335
  356
  378
  401
  426
  452
  480
  509
  540
EBITDA, $m
  214
  219
  225
  232
  241
  250
  260
  271
  283
  297
  311
  327
  343
  361
  380
  400
  422
  445
  470
  496
  523
  552
  583
  616
  651
  687
  726
  767
  810
  855
Interest expense (income), $m
  51
  89
  91
  93
  95
  97
  100
  103
  107
  110
  114
  118
  123
  128
  133
  138
  144
  150
  157
  164
  171
  179
  187
  195
  204
  214
  224
  234
  245
  257
  269
Earnings before tax, $m
  27
  28
  30
  32
  34
  37
  40
  44
  48
  53
  58
  63
  69
  76
  83
  90
  98
  107
  117
  127
  137
  149
  161
  174
  188
  203
  218
  235
  252
  271
Tax expense, $m
  7
  8
  8
  9
  9
  10
  11
  12
  13
  14
  16
  17
  19
  20
  22
  24
  27
  29
  31
  34
  37
  40
  43
  47
  51
  55
  59
  63
  68
  73
Net income, $m
  20
  21
  22
  23
  25
  27
  29
  32
  35
  38
  42
  46
  50
  55
  60
  66
  72
  78
  85
  92
  100
  109
  118
  127
  137
  148
  159
  171
  184
  198

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
  2,982
  3,050
  3,129
  3,217
  3,314
  3,421
  3,538
  3,664
  3,800
  3,945
  4,101
  4,268
  4,445
  4,633
  4,833
  5,045
  5,269
  5,506
  5,757
  6,021
  6,300
  6,595
  6,905
  7,232
  7,576
  7,939
  8,320
  8,722
  9,144
  9,589
Adjusted assets (=assets-cash), $m
  2,982
  3,050
  3,129
  3,217
  3,314
  3,421
  3,538
  3,664
  3,800
  3,945
  4,101
  4,268
  4,445
  4,633
  4,833
  5,045
  5,269
  5,506
  5,757
  6,021
  6,300
  6,595
  6,905
  7,232
  7,576
  7,939
  8,320
  8,722
  9,144
  9,589
Revenue / Adjusted assets
  0.130
  0.130
  0.130
  0.130
  0.130
  0.130
  0.130
  0.130
  0.130
  0.130
  0.130
  0.130
  0.130
  0.130
  0.130
  0.130
  0.130
  0.130
  0.130
  0.130
  0.130
  0.130
  0.130
  0.130
  0.130
  0.130
  0.130
  0.130
  0.130
  0.130
Average production assets, $m
  2,354
  2,408
  2,470
  2,540
  2,617
  2,701
  2,793
  2,893
  3,000
  3,115
  3,238
  3,370
  3,510
  3,659
  3,816
  3,984
  4,161
  4,348
  4,546
  4,755
  4,975
  5,207
  5,452
  5,711
  5,982
  6,269
  6,570
  6,887
  7,220
  7,571
Working capital, $m
  -38
  -38
  -39
  -41
  -42
  -43
  -45
  -46
  -48
  -50
  -52
  -54
  -56
  -58
  -61
  -64
  -66
  -69
  -73
  -76
  -79
  -83
  -87
  -91
  -96
  -100
  -105
  -110
  -115
  -121
Total debt, $m
  1,677
  1,714
  1,756
  1,803
  1,856
  1,913
  1,975
  2,043
  2,116
  2,194
  2,278
  2,367
  2,462
  2,563
  2,670
  2,783
  2,904
  3,031
  3,165
  3,307
  3,456
  3,614
  3,780
  3,956
  4,140
  4,335
  4,539
  4,754
  4,981
  5,219
Total liabilities, $m
  1,598
  1,635
  1,677
  1,724
  1,776
  1,834
  1,896
  1,964
  2,037
  2,115
  2,198
  2,288
  2,383
  2,483
  2,591
  2,704
  2,824
  2,951
  3,086
  3,227
  3,377
  3,535
  3,701
  3,876
  4,061
  4,255
  4,460
  4,675
  4,901
  5,139
Total equity, $m
  1,383
  1,415
  1,452
  1,492
  1,538
  1,587
  1,641
  1,700
  1,763
  1,831
  1,903
  1,980
  2,062
  2,150
  2,243
  2,341
  2,445
  2,555
  2,671
  2,794
  2,923
  3,060
  3,204
  3,356
  3,515
  3,684
  3,861
  4,047
  4,243
  4,449
Total liabilities and equity, $m
  2,981
  3,050
  3,129
  3,216
  3,314
  3,421
  3,537
  3,664
  3,800
  3,946
  4,101
  4,268
  4,445
  4,633
  4,834
  5,045
  5,269
  5,506
  5,757
  6,021
  6,300
  6,595
  6,905
  7,232
  7,576
  7,939
  8,321
  8,722
  9,144
  9,588
Debt-to-equity ratio
  1.210
  1.210
  1.210
  1.210
  1.210
  1.210
  1.200
  1.200
  1.200
  1.200
  1.200
  1.200
  1.190
  1.190
  1.190
  1.190
  1.190
  1.190
  1.180
  1.180
  1.180
  1.180
  1.180
  1.180
  1.180
  1.180
  1.180
  1.170
  1.170
  1.170
Adjusted equity ratio
  0.464
  0.464
  0.464
  0.464
  0.464
  0.464
  0.464
  0.464
  0.464
  0.464
  0.464
  0.464
  0.464
  0.464
  0.464
  0.464
  0.464
  0.464
  0.464
  0.464
  0.464
  0.464
  0.464
  0.464
  0.464
  0.464
  0.464
  0.464
  0.464
  0.464

CASH FLOW

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Net income, $m
  20
  21
  22
  23
  25
  27
  29
  32
  35
  38
  42
  46
  50
  55
  60
  66
  72
  78
  85
  92
  100
  109
  118
  127
  137
  148
  159
  171
  184
  198
Depreciation, amort., depletion, $m
  98
  100
  103
  106
  109
  113
  116
  121
  125
  130
  135
  140
  146
  152
  159
  166
  173
  181
  189
  198
  207
  217
  227
  238
  249
  261
  274
  287
  301
  315
Funds from operations, $m
  118
  121
  125
  129
  134
  140
  146
  153
  160
  168
  177
  187
  197
  208
  219
  232
  245
  259
  275
  291
  308
  326
  345
  365
  386
  409
  433
  458
  485
  513
Change in working capital, $m
  -1
  -1
  -1
  -1
  -1
  -1
  -1
  -2
  -2
  -2
  -2
  -2
  -2
  -2
  -3
  -3
  -3
  -3
  -3
  -3
  -4
  -4
  -4
  -4
  -4
  -5
  -5
  -5
  -5
  -6
Cash from operations, $m
  119
  122
  126
  130
  135
  141
  147
  154
  162
  170
  179
  189
  199
  210
  222
  235
  248
  262
  278
  294
  311
  329
  349
  369
  391
  414
  438
  463
  490
  519
Maintenance CAPEX, $m
  -96
  -98
  -100
  -103
  -106
  -109
  -113
  -116
  -121
  -125
  -130
  -135
  -140
  -146
  -152
  -159
  -166
  -173
  -181
  -189
  -198
  -207
  -217
  -227
  -238
  -249
  -261
  -274
  -287
  -301
New CAPEX, $m
  -46
  -54
  -62
  -69
  -77
  -84
  -92
  -100
  -107
  -115
  -123
  -131
  -140
  -149
  -158
  -167
  -177
  -187
  -198
  -209
  -220
  -232
  -245
  -258
  -272
  -286
  -301
  -317
  -334
  -351
Cash from investing activities, $m
  -142
  -152
  -162
  -172
  -183
  -193
  -205
  -216
  -228
  -240
  -253
  -266
  -280
  -295
  -310
  -326
  -343
  -360
  -379
  -398
  -418
  -439
  -462
  -485
  -510
  -535
  -562
  -591
  -621
  -652
Free cash flow, $m
  -24
  -30
  -37
  -42
  -48
  -53
  -57
  -62
  -66
  -70
  -74
  -78
  -81
  -85
  -88
  -92
  -95
  -98
  -101
  -104
  -107
  -110
  -113
  -116
  -119
  -122
  -125
  -127
  -130
  -133
Issuance/(repayment) of debt, $m
  30
  37
  42
  47
  52
  57
  62
  68
  73
  78
  84
  89
  95
  101
  107
  114
  120
  127
  134
  142
  150
  158
  166
  175
  185
  194
  205
  215
  226
  238
Issuance/(repurchase) of shares, $m
  7
  11
  15
  18
  20
  23
  25
  26
  28
  29
  30
  31
  32
  32
  32
  32
  32
  32
  31
  30
  29
  28
  26
  25
  23
  20
  18
  15
  12
  8
Cash from financing (excl. dividends), $m  
  37
  48
  57
  65
  72
  80
  87
  94
  101
  107
  114
  120
  127
  133
  139
  146
  152
  159
  165
  172
  179
  186
  192
  200
  208
  214
  223
  230
  238
  246
Total cash flow (excl. dividends), $m
  12
  18
  20
  23
  25
  27
  30
  32
  35
  37
  40
  43
  45
  48
  51
  54
  57
  61
  64
  68
  71
  75
  79
  84
  88
  93
  98
  103
  108
  114
Retained Cash Flow (-), $m
  -26
  -32
  -36
  -41
  -45
  -50
  -54
  -59
  -63
  -68
  -72
  -77
  -82
  -87
  -93
  -98
  -104
  -110
  -116
  -123
  -130
  -137
  -144
  -152
  -160
  -168
  -177
  -186
  -196
  -206
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
  -14
  -14
  -16
  -18
  -20
  -22
  -24
  -26
  -28
  -30
  -32
  -35
  -37
  -39
  -42
  -44
  -47
  -49
  -52
  -55
  -58
  -61
  -65
  -68
  -72
  -75
  -79
  -84
  -88
  -92
Discount rate, %
  8.50
  8.93
  9.37
  9.84
  10.33
  10.85
  11.39
  11.96
  12.56
  13.19
  13.85
  14.54
  15.26
  16.03
  16.83
  17.67
  18.55
  19.48
  20.46
  21.48
  22.55
  23.68
  24.86
  26.11
  27.41
  28.78
  30.22
  31.73
  33.32
  34.99
PV of cash for distribution, $m
  -13
  -12
  -12
  -13
  -12
  -12
  -11
  -11
  -10
  -9
  -8
  -7
  -6
  -5
  -4
  -3
  -3
  -2
  -2
  -1
  -1
  -1
  0
  0
  0
  0
  0
  0
  0
  0
Current shareholders' claim on cash, %
  99.3
  98.2
  96.7
  95.1
  93.3
  91.4
  89.4
  87.4
  85.3
  83.4
  81.4
  79.6
  77.8
  76.1
  74.5
  73.0
  71.6
  70.3
  69.1
  68.0
  67.0
  66.1
  65.3
  64.6
  64.0
  63.4
  63.0
  62.6
  62.4
  62.2

Costamare Inc. (Costamare) is a holding company. The Company is an international owner of containerships. The Company is engaged in chartering its vessels to various liner companies. The Company provides marine transportation services around the world by chartering its container vessels to liner operators under long, medium and short-term time charters. As of March 10, 2017, the Company had a fleet of 69 containerships with a total capacity of approximately 456,000 TEU, including five newbuilds on order. The Company's fleet of vessels includes Cosco Guangzhou, Titan, Cosco Yantian, Valor, Valiant and Maersk Kobe. Its subsidiaries include Adele Shipping Co., Bastian Shipping Co., Cadence Shipping Co., Jodie Shipping Co. and Kayley Shipping Co.

FINANCIAL RATIOS  of  Costamare Inc. (CMRE)

Valuation Ratios
P/E Ratio 6.3
Price to Sales 1.1
Price to Book 0.5
Price to Tangible Book
Price to Cash Flow 2.3
Price to Free Cash Flow 2.3
Growth Rates
Sales Growth Rate -4.5%
Sales - 3 Yr. Growth Rate %
EPS Growth Rate %
EPS - 3 Yr. Growth Rate %
Capital Spending Gr. Rate 0%
Cap. Spend. - 3 Yr. Gr. Rate -43.5%
Financial Strength
Quick Ratio 1
Current Ratio 0
LT Debt to Equity 110.6%
Total Debt to Equity 131.8%
Interest Coverage 3
Management Effectiveness
Return On Assets 5.1%
Ret/ On Assets - 3 Yr. Avg. 6.1%
Return On Total Capital 3.3%
Ret/ On T. Cap. - 3 Yr. Avg. 4.5%
Return On Equity 8%
Return On Equity - 3 Yr. Avg. 13.4%
Asset Turnover 0.2
Profitability Ratios
Gross Margin 76.3%
Gross Margin - 3 Yr. Avg. 74.9%
EBITDA Margin 50%
EBITDA Margin - 3 Yr. Avg. 54.9%
Operating Margin 35.5%
Oper. Margin - 3 Yr. Avg. 41.5%
Pre-Tax Margin 17.5%
Pre-Tax Margin - 3 Yr. Avg. 23.6%
Net Profit Margin 17.5%
Net Profit Margin - 3 Yr. Avg. 23.6%
Effective Tax Rate 0%
Eff/ Tax Rate - 3 Yr. Avg. 0%
Payout Ratio 91.5%

CMRE stock valuation input parameters

Revenue. Company's revenue (or sales) is always the starting point of any cash flow forecast. In the CMRE stock intrinsic value calculation we used $380 million for the last fiscal year's total revenue generated by Costamare Inc.. The default revenue input number comes from 0001 income statement of Costamare 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 CMRE 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 8.5%, whose default value for CMRE is calculated based on our internal credit rating of Costamare 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 Costamare 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 CMRE stock the variable cost ratio is equal to 37.9%.

Fixed operating expenses is just that - expenses that are not dependant on the volume of production. They are set to $122 million in the base year in the intrinsic value calculation for CMRE 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 Costamare Inc..

Corporate tax rate of 27% is the nominal tax rate for Costamare 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 CMRE 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 CMRE are equal to 607.4%.

Life of production assets of 24 years is the average useful life of capital assets used in Costamare 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 CMRE is equal to -9.7%. 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 - $1357.124 million for Costamare 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 113.426 million for Costamare 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 Costamare Inc. at the current share price and the inputted number of shares is $0.6 billion.

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