Intrinsic value of Engility Holdings - EGL

Previous Close

$30.29

  Intrinsic Value

$33.72

stock screener

  Rating & Target

hold

+11%

Previous close

$30.29

 
Intrinsic value

$33.72

 
Up/down potential

+11%

 
Rating

hold

We calculate the intrinsic value of EGL 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 1.1

 

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
  1,971
  2,016
  2,068
  2,126
  2,190
  2,261
  2,338
  2,421
  2,511
  2,608
  2,711
  2,821
  2,938
  3,062
  3,194
  3,334
  3,482
  3,639
  3,805
  3,980
  4,164
  4,359
  4,564
  4,780
  5,007
  5,247
  5,499
  5,764
  6,043
  6,337
Variable operating expenses, $m
  1,851
  1,891
  1,936
  1,986
  2,042
  2,103
  2,170
  2,242
  2,320
  2,404
  2,350
  2,445
  2,547
  2,654
  2,769
  2,890
  3,019
  3,155
  3,298
  3,450
  3,610
  3,778
  3,956
  4,143
  4,340
  4,548
  4,767
  4,997
  5,239
  5,493
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
  1,851
  1,891
  1,936
  1,986
  2,042
  2,103
  2,170
  2,242
  2,320
  2,404
  2,350
  2,445
  2,547
  2,654
  2,769
  2,890
  3,019
  3,155
  3,298
  3,450
  3,610
  3,778
  3,956
  4,143
  4,340
  4,548
  4,767
  4,997
  5,239
  5,493
Operating income, $m
  119
  125
  132
  140
  148
  158
  168
  179
  191
  204
  361
  376
  391
  408
  425
  444
  464
  485
  507
  530
  555
  580
  608
  636
  667
  699
  732
  768
  805
  844
EBITDA, $m
  289
  295
  303
  311
  321
  331
  342
  355
  368
  382
  397
  413
  430
  449
  468
  488
  510
  533
  557
  583
  610
  638
  668
  700
  733
  768
  805
  844
  885
  928
Interest expense (income), $m
  0
  72
  74
  77
  80
  83
  86
  90
  94
  98
  103
  108
  114
  119
  126
  132
  139
  147
  154
  163
  171
  181
  190
  201
  211
  223
  235
  248
  261
  275
  290
Earnings before tax, $m
  47
  51
  55
  60
  66
  72
  78
  85
  93
  101
  253
  262
  272
  282
  293
  305
  317
  330
  344
  359
  374
  390
  407
  425
  444
  464
  485
  507
  530
  554
Tax expense, $m
  13
  14
  15
  16
  18
  19
  21
  23
  25
  27
  68
  71
  73
  76
  79
  82
  86
  89
  93
  97
  101
  105
  110
  115
  120
  125
  131
  137
  143
  150
Net income, $m
  34
  37
  40
  44
  48
  52
  57
  62
  68
  74
  185
  191
  198
  206
  214
  223
  232
  241
  251
  262
  273
  285
  297
  310
  324
  339
  354
  370
  387
  405

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
  2,066
  2,113
  2,167
  2,228
  2,296
  2,370
  2,451
  2,538
  2,632
  2,733
  2,841
  2,957
  3,079
  3,210
  3,348
  3,495
  3,650
  3,815
  3,988
  4,171
  4,365
  4,569
  4,784
  5,010
  5,249
  5,500
  5,764
  6,042
  6,335
  6,643
Adjusted assets (=assets-cash), $m
  2,066
  2,113
  2,167
  2,228
  2,296
  2,370
  2,451
  2,538
  2,632
  2,733
  2,841
  2,957
  3,079
  3,210
  3,348
  3,495
  3,650
  3,815
  3,988
  4,171
  4,365
  4,569
  4,784
  5,010
  5,249
  5,500
  5,764
  6,042
  6,335
  6,643
Revenue / Adjusted assets
  0.954
  0.954
  0.954
  0.954
  0.954
  0.954
  0.954
  0.954
  0.954
  0.954
  0.954
  0.954
  0.954
  0.954
  0.954
  0.954
  0.954
  0.954
  0.954
  0.954
  0.954
  0.954
  0.954
  0.954
  0.954
  0.954
  0.954
  0.954
  0.954
  0.954
Average production assets, $m
  786
  804
  825
  848
  874
  902
  933
  966
  1,002
  1,040
  1,082
  1,125
  1,172
  1,222
  1,275
  1,330
  1,390
  1,452
  1,518
  1,588
  1,661
  1,739
  1,821
  1,907
  1,998
  2,093
  2,194
  2,300
  2,411
  2,529
Working capital, $m
  89
  91
  93
  96
  99
  102
  105
  109
  113
  117
  122
  127
  132
  138
  144
  150
  157
  164
  171
  179
  187
  196
  205
  215
  225
  236
  247
  259
  272
  285
Total debt, $m
  993
  1,025
  1,062
  1,103
  1,148
  1,198
  1,252
  1,311
  1,374
  1,442
  1,514
  1,592
  1,674
  1,762
  1,855
  1,954
  2,058
  2,169
  2,285
  2,408
  2,538
  2,675
  2,820
  2,972
  3,132
  3,301
  3,479
  3,666
  3,862
  4,069
Total liabilities, $m
  1,388
  1,420
  1,456
  1,497
  1,543
  1,593
  1,647
  1,706
  1,769
  1,837
  1,909
  1,987
  2,069
  2,157
  2,250
  2,349
  2,453
  2,563
  2,680
  2,803
  2,933
  3,070
  3,215
  3,367
  3,527
  3,696
  3,873
  4,060
  4,257
  4,464
Total equity, $m
  677
  693
  711
  731
  753
  777
  804
  832
  863
  896
  932
  970
  1,010
  1,053
  1,098
  1,146
  1,197
  1,251
  1,308
  1,368
  1,432
  1,499
  1,569
  1,643
  1,722
  1,804
  1,891
  1,982
  2,078
  2,179
Total liabilities and equity, $m
  2,065
  2,113
  2,167
  2,228
  2,296
  2,370
  2,451
  2,538
  2,632
  2,733
  2,841
  2,957
  3,079
  3,210
  3,348
  3,495
  3,650
  3,814
  3,988
  4,171
  4,365
  4,569
  4,784
  5,010
  5,249
  5,500
  5,764
  6,042
  6,335
  6,643
Debt-to-equity ratio
  1.470
  1.480
  1.490
  1.510
  1.520
  1.540
  1.560
  1.570
  1.590
  1.610
  1.630
  1.640
  1.660
  1.670
  1.690
  1.700
  1.720
  1.730
  1.750
  1.760
  1.770
  1.790
  1.800
  1.810
  1.820
  1.830
  1.840
  1.850
  1.860
  1.870
Adjusted equity ratio
  0.328
  0.328
  0.328
  0.328
  0.328
  0.328
  0.328
  0.328
  0.328
  0.328
  0.328
  0.328
  0.328
  0.328
  0.328
  0.328
  0.328
  0.328
  0.328
  0.328
  0.328
  0.328
  0.328
  0.328
  0.328
  0.328
  0.328
  0.328
  0.328
  0.328

CASH FLOW

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Net income, $m
  34
  37
  40
  44
  48
  52
  57
  62
  68
  74
  185
  191
  198
  206
  214
  223
  232
  241
  251
  262
  273
  285
  297
  310
  324
  339
  354
  370
  387
  405
Depreciation, amort., depletion, $m
  169
  170
  171
  172
  172
  173
  174
  175
  177
  178
  36
  38
  39
  41
  42
  44
  46
  48
  51
  53
  55
  58
  61
  64
  67
  70
  73
  77
  80
  84
Funds from operations, $m
  204
  207
  211
  215
  220
  226
  231
  238
  244
  252
  221
  229
  237
  247
  257
  267
  278
  289
  302
  315
  328
  343
  358
  374
  391
  408
  427
  447
  467
  489
Change in working capital, $m
  2
  2
  2
  3
  3
  3
  3
  4
  4
  4
  5
  5
  5
  6
  6
  6
  7
  7
  7
  8
  8
  9
  9
  10
  10
  11
  11
  12
  13
  13
Cash from operations, $m
  202
  205
  209
  213
  217
  223
  228
  234
  240
  247
  216
  224
  232
  241
  251
  261
  271
  282
  294
  307
  320
  334
  349
  364
  380
  398
  416
  435
  455
  476
Maintenance CAPEX, $m
  -26
  -26
  -27
  -27
  -28
  -29
  -30
  -31
  -32
  -33
  -35
  -36
  -38
  -39
  -41
  -42
  -44
  -46
  -48
  -51
  -53
  -55
  -58
  -61
  -64
  -67
  -70
  -73
  -77
  -80
New CAPEX, $m
  -15
  -18
  -21
  -23
  -26
  -28
  -31
  -33
  -36
  -38
  -41
  -44
  -47
  -50
  -53
  -56
  -59
  -63
  -66
  -70
  -74
  -78
  -82
  -86
  -91
  -96
  -101
  -106
  -111
  -117
Cash from investing activities, $m
  -41
  -44
  -48
  -50
  -54
  -57
  -61
  -64
  -68
  -71
  -76
  -80
  -85
  -89
  -94
  -98
  -103
  -109
  -114
  -121
  -127
  -133
  -140
  -147
  -155
  -163
  -171
  -179
  -188
  -197
Free cash flow, $m
  161
  161
  161
  162
  163
  165
  167
  170
  172
  175
  140
  144
  148
  152
  157
  162
  168
  174
  180
  186
  193
  201
  209
  217
  226
  235
  245
  256
  267
  278
Issuance/(repayment) of debt, $m
  28
  32
  36
  41
  45
  50
  54
  59
  63
  68
  73
  77
  83
  88
  93
  99
  104
  110
  117
  123
  130
  137
  144
  152
  160
  169
  178
  187
  197
  207
Issuance/(repurchase) of shares, $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 from financing (excl. dividends), $m  
  28
  32
  36
  41
  45
  50
  54
  59
  63
  68
  73
  77
  83
  88
  93
  99
  104
  110
  117
  123
  130
  137
  144
  152
  160
  169
  178
  187
  197
  207
Total cash flow (excl. dividends), $m
  189
  193
  198
  203
  209
  215
  221
  228
  236
  243
  213
  221
  230
  240
  250
  261
  272
  284
  296
  310
  323
  338
  353
  369
  386
  404
  423
  443
  463
  485
Retained Cash Flow (-), $m
  -12
  -16
  -18
  -20
  -22
  -24
  -26
  -29
  -31
  -33
  -35
  -38
  -40
  -43
  -45
  -48
  -51
  -54
  -57
  -60
  -63
  -67
  -71
  -74
  -78
  -82
  -87
  -91
  -96
  -101
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
  177
  177
  180
  183
  187
  191
  195
  200
  205
  210
  177
  184
  190
  197
  205
  213
  221
  230
  240
  249
  260
  271
  283
  295
  308
  322
  336
  351
  367
  384
Discount rate, %
  9.10
  9.56
  10.03
  10.53
  11.06
  11.61
  12.19
  12.80
  13.44
  14.12
  14.82
  15.56
  16.34
  17.16
  18.02
  18.92
  19.86
  20.86
  21.90
  23.00
  24.15
  25.35
  26.62
  27.95
  29.35
  30.82
  32.36
  33.97
  35.67
  37.46
PV of cash for distribution, $m
  162
  148
  135
  123
  111
  99
  87
  76
  66
  56
  39
  32
  27
  21
  17
  13
  10
  8
  6
  4
  3
  2
  1
  1
  0
  0
  0
  0
  0
  0
Current shareholders' claim on cash, %
  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
  100.0

Engility Holdings, Inc., together with its subsidiaries, provides integrated solutions and services for the U.S. government, supporting customers throughout defense, intelligence, space, federal civilian, and international communities. It offers various engineering, technical, analytical, advisory, training, logistics, and support services worldwide. The company offers services in the areas of specialized technical consulting, program and business support, engineering and technology lifecycle support, information technology modernization and sustainment, supply chain and logistics management, and training and education. It provides specialized technical consulting services for technology research and analysis, and policy and operational implementation; and program and business support services comprising strategic planning, acquisition support, program management, and enterprise transformation. The company also offers engineering and technology lifecycle support services, such as systems engineering and integration, modeling and simulation, test and evaluation, and software engineering and sustainment, as well as hardware engineering, sustainment, and modernization. In addition, it provides information technology modernization and sustainment services, including project management, software development and integration, hardware and network implementation, network and information security, cybersecurity, vulnerability assessments, information assurance, mobile application development, enterprise architecture, and secure cloud computing. Further, the company provides solutions for logistics, warehousing, asset management, kitting, shipping, and receiving; and defines, designs, develops, implements, and assesses training and education solutions. Engility Holdings, Inc. was incorporated in 2012 and is headquartered in Chantilly, Virginia.Engility Holdings, Inc. operates as a subsidiary of Birch Partners, LP.

FINANCIAL RATIOS  of  Engility Holdings (EGL)

Valuation Ratios
P/E Ratio 0
Price to Sales 0
Price to Book 0
Price to Tangible Book
Price to Cash Flow 0
Price to Free Cash Flow 0
Growth Rates
Sales Growth Rate -100%
Sales - 3 Yr. Growth Rate %
EPS Growth Rate %
EPS - 3 Yr. Growth Rate %
Capital Spending Gr. Rate NaN%
Cap. Spend. - 3 Yr. Gr. Rate NaN%
Financial Strength
Quick Ratio NaN
Current Ratio NaN
LT Debt to Equity 0%
Total Debt to Equity 0%
Interest Coverage 0
Management Effectiveness
Return On Assets 0%
Ret/ On Assets - 3 Yr. Avg. 0%
Return On Total Capital 0%
Ret/ On T. Cap. - 3 Yr. Avg. 0%
Return On Equity 0%
Return On Equity - 3 Yr. Avg. 0%
Asset Turnover 0
Profitability Ratios
Gross Margin 0%
Gross Margin - 3 Yr. Avg. 0%
EBITDA Margin 0%
EBITDA Margin - 3 Yr. Avg. 0%
Operating Margin 0%
Oper. Margin - 3 Yr. Avg. 0%
Pre-Tax Margin 0%
Pre-Tax Margin - 3 Yr. Avg. 0%
Net Profit Margin 0%
Net Profit Margin - 3 Yr. Avg. 0%
Effective Tax Rate 0%
Eff/ Tax Rate - 3 Yr. Avg. 0%
Payout Ratio 0%

EGL stock valuation input parameters

Revenue. Company's revenue (or sales) is always the starting point of any cash flow forecast. In the EGL stock intrinsic value calculation we used $1931.887 million for the last fiscal year's total revenue generated by Engility Holdings. The default revenue input number comes from 0001 income statement of Engility Holdings. 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 EGL 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 9.1%, whose default value for EGL is calculated based on our internal credit rating of Engility Holdings, 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 Engility Holdings.
    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 EGL stock the variable cost ratio is equal to 94.1%.

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 EGL 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 7.5% for Engility Holdings.

Corporate tax rate of 27% is the nominal tax rate for Engility Holdings. 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 EGL 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 EGL are equal to 39.9%.

Life of production assets of 33.6 years is the average useful life of capital assets used in Engility Holdings 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 EGL is equal to 4.5%. 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 - $665.484 million for Engility Holdings - 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 36.968 million for Engility Holdings 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 Engility Holdings at the current share price and the inputted number of shares is $1.1 billion.

RELATED COMPANIES Price Int.Val. Rating
GD General Dynami 179.84 416.37  str.buy
NOC Northrop Grumm 270.72 544.75  str.buy
RTN Raytheon 180.58 215.52  hold
ACM AECOM 32.49 235.04  str.buy
LMT Lockheed Marti 303.39 112.63  str.sell
KTOS Kratos Defense 15.00 2.73  str.sell
SAIC Science Applic 67.92 72.45  sell
HRS Harris Corp. 149.41 107.02  sell

COMPANY NEWS

▶ What Amazon's HQ2 means for what is already a hotly competitive market for tech talent   [Nov-13-18 05:25PM  American City Business Journals]
▶ 5 things to watch from the latest round of government contractor earnings reports   [Nov-06-18 03:06PM  American City Business Journals]
▶ Engility Holdings: 3Q Earnings Snapshot   [07:57AM  Associated Press]
▶ SAIC and Engility Announce Expiration of HSR Waiting Period   [Oct-23-18 05:20PM  Business Wire]
▶ 5 buyers were in the mix for Engility before SAIC won out   [09:59AM  American City Business Journals]
▶ Engility secures $25 million in Navy contracts   [Oct-08-18 08:00AM  PR Newswire]
▶ Heres what Engilitys CEO will make if the SAIC deal closes   [01:56PM  American City Business Journals]
▶ Company News For Sep 11, 2018   [10:13AM  Zacks]
▶ Why the timing is right for SAIC's $2.5B deal to acquire Engility   [02:10PM  American City Business Journals]
▶ [$$] SAIC to Buy Engility for $1.5 Billion in Stock   [10:42AM  The Wall Street Journal]
▶ SAIC buying Engility in $2.5 billion all-stock deal   [08:00AM  American City Business Journals]

CONTACT US       ASSET ALLOCATION

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

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