Intrinsic value of Carbo Ceramics, Inc. - CRR

Previous Close

$3.86

  Intrinsic Value

$2.90

stock screener

  Rating & Target

sell

-25%

Previous close

$3.86

 
Intrinsic value

$2.90

 
Up/down potential

-25%

 
Rating

sell

We calculate the intrinsic value of CRR 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 0.1

 

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
  215
  220
  226
  232
  239
  247
  255
  264
  274
  285
  296
  308
  321
  334
  349
  364
  380
  397
  416
  435
  455
  476
  498
  522
  547
  573
  601
  630
  660
  692
Variable operating expenses, $m
  468
  479
  491
  505
  520
  537
  555
  575
  596
  619
  642
  668
  696
  726
  757
  790
  825
  862
  902
  943
  987
  1,033
  1,082
  1,133
  1,187
  1,243
  1,303
  1,366
  1,432
  1,502
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
  468
  479
  491
  505
  520
  537
  555
  575
  596
  619
  642
  668
  696
  726
  757
  790
  825
  862
  902
  943
  987
  1,033
  1,082
  1,133
  1,187
  1,243
  1,303
  1,366
  1,432
  1,502
Operating income, $m
  -253
  -259
  -265
  -273
  -281
  -290
  -300
  -310
  -322
  -334
  -346
  -360
  -375
  -391
  -408
  -426
  -445
  -465
  -486
  -508
  -532
  -557
  -583
  -611
  -640
  -670
  -703
  -736
  -772
  -810
EBITDA, $m
  -217
  -222
  -228
  -234
  -241
  -249
  -258
  -267
  -277
  -287
  -299
  -311
  -324
  -337
  -352
  -367
  -384
  -401
  -419
  -439
  -459
  -480
  -503
  -527
  -552
  -578
  -606
  -635
  -666
  -698
Interest expense (income), $m
  5
  8
  9
  9
  9
  9
  10
  10
  10
  11
  11
  12
  12
  13
  13
  14
  14
  15
  16
  16
  17
  18
  19
  20
  21
  22
  23
  24
  25
  26
  28
Earnings before tax, $m
  -261
  -267
  -274
  -282
  -290
  -300
  -310
  -321
  -333
  -345
  -358
  -372
  -388
  -404
  -422
  -440
  -460
  -481
  -502
  -526
  -550
  -576
  -603
  -631
  -661
  -693
  -726
  -762
  -798
  -837
Tax expense, $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
Net income, $m
  -261
  -267
  -274
  -282
  -290
  -300
  -310
  -321
  -333
  -345
  -358
  -372
  -388
  -404
  -422
  -440
  -460
  -481
  -502
  -526
  -550
  -576
  -603
  -631
  -661
  -693
  -726
  -762
  -798
  -837

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
  437
  448
  459
  472
  486
  502
  519
  538
  557
  579
  602
  626
  652
  680
  709
  740
  773
  808
  845
  883
  924
  968
  1,013
  1,061
  1,112
  1,165
  1,221
  1,280
  1,342
  1,407
Adjusted assets (=assets-cash), $m
  437
  448
  459
  472
  486
  502
  519
  538
  557
  579
  602
  626
  652
  680
  709
  740
  773
  808
  845
  883
  924
  968
  1,013
  1,061
  1,112
  1,165
  1,221
  1,280
  1,342
  1,407
Revenue / Adjusted assets
  0.492
  0.491
  0.492
  0.492
  0.492
  0.492
  0.491
  0.491
  0.492
  0.492
  0.492
  0.492
  0.492
  0.491
  0.492
  0.492
  0.492
  0.491
  0.492
  0.493
  0.492
  0.492
  0.492
  0.492
  0.492
  0.492
  0.492
  0.492
  0.492
  0.492
Average production assets, $m
  311
  319
  327
  336
  346
  357
  369
  383
  397
  412
  428
  446
  464
  484
  505
  527
  550
  575
  601
  629
  658
  689
  721
  755
  791
  829
  869
  911
  955
  1,002
Working capital, $m
  61
  63
  64
  66
  68
  70
  73
  75
  78
  81
  84
  88
  91
  95
  99
  104
  108
  113
  118
  124
  130
  136
  142
  149
  156
  163
  171
  179
  188
  197
Total debt, $m
  90
  92
  95
  98
  101
  105
  108
  112
  117
  122
  127
  132
  138
  144
  151
  157
  165
  172
  181
  189
  198
  208
  218
  229
  240
  252
  264
  277
  291
  305
Total liabilities, $m
  97
  99
  102
  105
  108
  111
  115
  119
  124
  129
  134
  139
  145
  151
  157
  164
  172
  179
  188
  196
  205
  215
  225
  236
  247
  259
  271
  284
  298
  312
Total equity, $m
  340
  348
  357
  367
  378
  390
  404
  418
  434
  450
  468
  487
  507
  529
  552
  576
  601
  629
  657
  687
  719
  753
  788
  825
  865
  906
  950
  996
  1,044
  1,094
Total liabilities and equity, $m
  437
  447
  459
  472
  486
  501
  519
  537
  558
  579
  602
  626
  652
  680
  709
  740
  773
  808
  845
  883
  924
  968
  1,013
  1,061
  1,112
  1,165
  1,221
  1,280
  1,342
  1,406
Debt-to-equity ratio
  0.270
  0.270
  0.270
  0.270
  0.270
  0.270
  0.270
  0.270
  0.270
  0.270
  0.270
  0.270
  0.270
  0.270
  0.270
  0.270
  0.270
  0.270
  0.270
  0.280
  0.280
  0.280
  0.280
  0.280
  0.280
  0.280
  0.280
  0.280
  0.280
  0.280
Adjusted equity ratio
  0.778
  0.778
  0.778
  0.778
  0.778
  0.778
  0.778
  0.778
  0.778
  0.778
  0.778
  0.778
  0.778
  0.778
  0.778
  0.778
  0.778
  0.778
  0.778
  0.778
  0.778
  0.778
  0.778
  0.778
  0.778
  0.778
  0.778
  0.778
  0.778
  0.778

CASH FLOW

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Net income, $m
  -261
  -267
  -274
  -282
  -290
  -300
  -310
  -321
  -333
  -345
  -358
  -372
  -388
  -404
  -422
  -440
  -460
  -481
  -502
  -526
  -550
  -576
  -603
  -631
  -661
  -693
  -726
  -762
  -798
  -837
Depreciation, amort., depletion, $m
  36
  36
  37
  38
  40
  41
  42
  44
  45
  47
  48
  50
  52
  54
  56
  59
  61
  64
  67
  70
  73
  77
  80
  84
  88
  92
  97
  101
  106
  111
Funds from operations, $m
  -226
  -231
  -237
  -243
  -251
  -259
  -268
  -277
  -287
  -298
  -310
  -323
  -336
  -351
  -366
  -382
  -399
  -417
  -436
  -456
  -477
  -499
  -523
  -547
  -574
  -601
  -630
  -660
  -692
  -726
Change in working capital, $m
  1
  1
  2
  2
  2
  2
  2
  3
  3
  3
  3
  3
  4
  4
  4
  4
  5
  5
  5
  5
  6
  6
  6
  7
  7
  7
  8
  8
  9
  9
Cash from operations, $m
  -227
  -232
  -238
  -245
  -253
  -261
  -270
  -280
  -290
  -301
  -313
  -326
  -340
  -354
  -370
  -386
  -403
  -422
  -441
  -461
  -483
  -505
  -529
  -554
  -581
  -608
  -638
  -669
  -701
  -735
Maintenance CAPEX, $m
  -34
  -35
  -35
  -36
  -37
  -38
  -40
  -41
  -43
  -44
  -46
  -48
  -50
  -52
  -54
  -56
  -59
  -61
  -64
  -67
  -70
  -73
  -77
  -80
  -84
  -88
  -92
  -97
  -101
  -106
New CAPEX, $m
  -6
  -7
  -8
  -9
  -10
  -11
  -12
  -13
  -14
  -15
  -16
  -17
  -19
  -20
  -21
  -22
  -23
  -25
  -26
  -28
  -29
  -31
  -32
  -34
  -36
  -38
  -40
  -42
  -44
  -46
Cash from investing activities, $m
  -40
  -42
  -43
  -45
  -47
  -49
  -52
  -54
  -57
  -59
  -62
  -65
  -69
  -72
  -75
  -78
  -82
  -86
  -90
  -95
  -99
  -104
  -109
  -114
  -120
  -126
  -132
  -139
  -145
  -152
Free cash flow, $m
  -267
  -274
  -282
  -291
  -300
  -311
  -322
  -334
  -347
  -361
  -376
  -391
  -408
  -426
  -444
  -464
  -485
  -507
  -531
  -556
  -582
  -609
  -638
  -668
  -701
  -734
  -770
  -807
  -846
  -888
Issuance/(repayment) of debt, $m
  2
  2
  3
  3
  3
  3
  4
  4
  4
  5
  5
  5
  6
  6
  7
  7
  7
  8
  8
  9
  9
  10
  10
  11
  11
  12
  12
  13
  14
  14
Issuance/(repurchase) of shares, $m
  268
  275
  283
  292
  301
  312
  323
  335
  348
  362
  376
  391
  408
  426
  445
  464
  485
  508
  531
  556
  582
  609
  638
  669
  701
  735
  770
  807
  847
  888
Cash from financing (excl. dividends), $m  
  270
  277
  286
  295
  304
  315
  327
  339
  352
  367
  381
  396
  414
  432
  452
  471
  492
  516
  539
  565
  591
  619
  648
  680
  712
  747
  782
  820
  861
  902
Total cash flow (excl. dividends), $m
  3
  3
  4
  4
  4
  5
  5
  5
  6
  6
  5
  6
  6
  6
  7
  7
  7
  8
  8
  9
  9
  10
  10
  11
  11
  12
  13
  13
  14
  15
Retained Cash Flow (-), $m
  -268
  -275
  -283
  -292
  -301
  -312
  -323
  -335
  -348
  -362
  -376
  -391
  -408
  -426
  -445
  -464
  -485
  -508
  -531
  -556
  -582
  -609
  -638
  -669
  -701
  -735
  -770
  -807
  -847
  -888
Prev. year cash balance distribution, $m
  3
  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
  -262
  -272
  -279
  -288
  -297
  -307
  -318
  -330
  -342
  -356
  -370
  -386
  -402
  -420
  -438
  -457
  -478
  -500
  -523
  -547
  -573
  -600
  -628
  -658
  -689
  -722
  -757
  -794
  -833
  -873
Discount rate, %
  5.70
  5.99
  6.28
  6.60
  6.93
  7.27
  7.64
  8.02
  8.42
  8.84
  9.28
  9.75
  10.24
  10.75
  11.29
  11.85
  12.44
  13.06
  13.72
  14.40
  15.12
  15.88
  16.67
  17.51
  18.38
  19.30
  20.27
  21.28
  22.34
  23.46
PV of cash for distribution, $m
  -248
  -242
  -233
  -223
  -212
  -202
  -190
  -178
  -165
  -153
  -140
  -126
  -113
  -100
  -88
  -76
  -65
  -55
  -45
  -37
  -30
  -23
  -18
  -14
  -10
  -7
  -5
  -4
  -2
  -2
Current shareholders' claim on cash, %
  46.6
  21.6
  10.0
  4.6
  2.1
  1.0
  0.4
  0.2
  0.1
  0.0
  0.0
  0.0
  0.0
  0.0
  0.0
  0.0
  0.0
  0.0
  0.0
  0.0
  0.0
  0.0
  0.0
  0.0
  0.0
  0.0
  0.0
  0.0
  0.0
  0.0

CARBO Ceramics Inc. is a technology company that provides products and services to the global oil and gas and industrial markets. The Company operates through two segments: Oilfield Technologies and Services, and Environmental Products and Services. The Company's oilfield technologies and services segment includes the manufacturing and selling of proppant products for use primarily in the hydraulic fracturing of oil and natural gas wells, Fracpro software for the design of fracture treatments, and StrataGen consulting services for the optimizing of well completions. The Company's environmental products and services segment is intended to protect operators' assets, minimize environmental risks, and lower lease operating expense (LOE). The Company, through Asset Guard Products Inc. (AGPI), provides spill prevention, containment and countermeasure systems for the oil and gas industry. The Company manufactures various ceramic proppants.

FINANCIAL RATIOS  of  Carbo Ceramics, Inc. (CRR)

Valuation Ratios
P/E Ratio -1.3
Price to Sales 1
Price to Book 0.2
Price to Tangible Book
Price to Cash Flow -5.8
Price to Free Cash Flow -4.2
Growth Rates
Sales Growth Rate -63.2%
Sales - 3 Yr. Growth Rate %
EPS Growth Rate %
EPS - 3 Yr. Growth Rate %
Capital Spending Gr. Rate -88.9%
Cap. Spend. - 3 Yr. Gr. Rate -41.2%
Financial Strength
Quick Ratio 7
Current Ratio 0
LT Debt to Equity 10.9%
Total Debt to Equity 13.1%
Interest Coverage -25
Management Effectiveness
Return On Assets -9.9%
Ret/ On Assets - 3 Yr. Avg. -5.3%
Return On Total Capital -11.2%
Ret/ On T. Cap. - 3 Yr. Avg. -6.1%
Return On Equity -12.7%
Return On Equity - 3 Yr. Avg. -7%
Asset Turnover 0.1
Profitability Ratios
Gross Margin -82.5%
Gross Margin - 3 Yr. Avg. -24.9%
EBITDA Margin -75.7%
EBITDA Margin - 3 Yr. Avg. -30.6%
Operating Margin -122.3%
Oper. Margin - 3 Yr. Avg. -55.4%
Pre-Tax Margin -127.2%
Pre-Tax Margin - 3 Yr. Avg. -57.1%
Net Profit Margin -77.7%
Net Profit Margin - 3 Yr. Avg. -36.1%
Effective Tax Rate 38.9%
Eff/ Tax Rate - 3 Yr. Avg. 37.2%
Payout Ratio 0%

CRR stock valuation input parameters

Revenue. Company's revenue (or sales) is always the starting point of any cash flow forecast. In the CRR stock intrinsic value calculation we used $211 million for the last fiscal year's total revenue generated by Carbo Ceramics, Inc.. The default revenue input number comes from 0001 income statement of Carbo Ceramics, 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 CRR 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 5.7%, whose default value for CRR is calculated based on our internal credit rating of Carbo Ceramics, 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 Carbo Ceramics, 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 CRR stock the variable cost ratio is equal to 217.5%.

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 CRR 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 9.5% for Carbo Ceramics, Inc..

Corporate tax rate of 27% is the nominal tax rate for Carbo Ceramics, 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 CRR 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 CRR are equal to 144.7%.

Life of production assets of 9 years is the average useful life of capital assets used in Carbo Ceramics, 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 CRR is equal to 28.5%. 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 - $336.283 million for Carbo Ceramics, 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 28.094 million for Carbo Ceramics, 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 Carbo Ceramics, Inc. at the current share price and the inputted number of shares is $0.1 billion.

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