Intrinsic value of Ellomay Capital - ELLO

Previous Close

$8.27

  Intrinsic Value

$1.71

stock screener

  Rating & Target

str. sell

-79%

Previous close

$8.27

 
Intrinsic value

$1.71

 
Up/down potential

-79%

 
Rating

str. sell

We calculate the intrinsic value of ELLO 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, %
  17.20
  15.98
  14.88
  13.89
  13.00
  12.20
  11.48
  10.84
  10.25
  9.73
  9.25
  8.83
  8.45
  8.10
  7.79
  7.51
  7.26
  7.03
  6.83
  6.65
  6.48
  6.33
  6.20
  6.08
  5.97
  5.88
  5.79
  5.71
  5.64
  5.57
Revenue, $m
  16
  19
  21
  24
  27
  31
  34
  38
  42
  46
  50
  55
  59
  64
  69
  74
  80
  85
  91
  97
  103
  110
  117
  124
  131
  139
  147
  155
  164
  173
Variable operating expenses, $m
  10
  12
  13
  15
  17
  19
  21
  23
  26
  28
  30
  33
  36
  39
  42
  45
  48
  51
  55
  59
  62
  66
  70
  75
  79
  84
  89
  94
  99
  104
Fixed operating expenses, $m
  3
  3
  3
  3
  3
  3
  3
  4
  4
  4
  4
  4
  4
  4
  4
  4
  4
  4
  5
  5
  5
  5
  5
  5
  5
  5
  5
  6
  6
  6
Total operating expenses, $m
  13
  15
  16
  18
  20
  22
  24
  27
  30
  32
  34
  37
  40
  43
  46
  49
  52
  55
  60
  64
  67
  71
  75
  80
  84
  89
  94
  100
  105
  110
Operating income, $m
  3
  4
  5
  6
  7
  8
  10
  11
  12
  14
  16
  18
  20
  21
  23
  25
  27
  29
  32
  34
  36
  39
  41
  44
  47
  50
  53
  56
  60
  63
EBITDA, $m
  8
  10
  12
  14
  16
  19
  21
  24
  26
  29
  32
  35
  38
  42
  45
  49
  53
  57
  61
  65
  69
  74
  79
  84
  89
  94
  100
  106
  112
  118
Interest expense (income), $m
  3
  10
  11
  13
  15
  17
  19
  22
  24
  27
  30
  33
  36
  39
  42
  46
  50
  53
  57
  61
  66
  70
  74
  79
  84
  89
  95
  100
  106
  112
  119
Earnings before tax, $m
  -7
  -7
  -8
  -9
  -10
  -11
  -12
  -13
  -15
  -16
  -17
  -18
  -20
  -21
  -23
  -24
  -26
  -28
  -30
  -32
  -34
  -36
  -38
  -40
  -42
  -45
  -47
  -50
  -53
  -55
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
  -7
  -7
  -8
  -9
  -10
  -11
  -12
  -13
  -15
  -16
  -17
  -18
  -20
  -21
  -23
  -24
  -26
  -28
  -30
  -32
  -34
  -36
  -38
  -40
  -42
  -45
  -47
  -50
  -53
  -55

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
  195
  226
  260
  296
  334
  375
  418
  463
  511
  561
  612
  667
  723
  781
  842
  905
  971
  1,040
  1,111
  1,184
  1,261
  1,341
  1,424
  1,511
  1,601
  1,695
  1,793
  1,896
  2,003
  2,114
Adjusted assets (=assets-cash), $m
  195
  226
  260
  296
  334
  375
  418
  463
  511
  561
  612
  667
  723
  781
  842
  905
  971
  1,040
  1,111
  1,184
  1,261
  1,341
  1,424
  1,511
  1,601
  1,695
  1,793
  1,896
  2,003
  2,114
Revenue / Adjusted assets
  0.082
  0.084
  0.081
  0.081
  0.081
  0.083
  0.081
  0.082
  0.082
  0.082
  0.082
  0.082
  0.082
  0.082
  0.082
  0.082
  0.082
  0.082
  0.082
  0.082
  0.082
  0.082
  0.082
  0.082
  0.082
  0.082
  0.082
  0.082
  0.082
  0.082
Average production assets, $m
  88
  103
  118
  134
  152
  170
  190
  210
  232
  254
  278
  302
  328
  354
  382
  411
  440
  471
  504
  537
  572
  608
  646
  685
  726
  769
  813
  860
  908
  959
Working capital, $m
  8
  9
  11
  12
  14
  15
  17
  19
  21
  23
  25
  27
  30
  32
  35
  37
  40
  43
  46
  49
  52
  55
  58
  62
  66
  70
  74
  78
  82
  87
Total debt, $m
  122
  142
  164
  188
  213
  240
  268
  297
  328
  361
  395
  430
  467
  505
  545
  586
  629
  674
  720
  768
  818
  871
  925
  981
  1,040
  1,102
  1,166
  1,233
  1,303
  1,375
Total liabilities, $m
  127
  148
  170
  193
  218
  245
  273
  303
  334
  366
  400
  435
  472
  510
  550
  591
  634
  679
  725
  773
  824
  876
  930
  987
  1,046
  1,107
  1,171
  1,238
  1,308
  1,381
Total equity, $m
  68
  78
  90
  103
  116
  130
  145
  161
  177
  195
  213
  231
  251
  271
  292
  314
  337
  361
  385
  411
  438
  465
  494
  524
  556
  588
  622
  658
  695
  734
Total liabilities and equity, $m
  195
  226
  260
  296
  334
  375
  418
  464
  511
  561
  613
  666
  723
  781
  842
  905
  971
  1,040
  1,110
  1,184
  1,262
  1,341
  1,424
  1,511
  1,602
  1,695
  1,793
  1,896
  2,003
  2,115
Debt-to-equity ratio
  1.810
  1.820
  1.820
  1.830
  1.840
  1.840
  1.850
  1.850
  1.850
  1.860
  1.860
  1.860
  1.860
  1.860
  1.860
  1.870
  1.870
  1.870
  1.870
  1.870
  1.870
  1.870
  1.870
  1.870
  1.870
  1.870
  1.870
  1.870
  1.870
  1.870
Adjusted equity ratio
  0.347
  0.347
  0.347
  0.347
  0.347
  0.347
  0.347
  0.347
  0.347
  0.347
  0.347
  0.347
  0.347
  0.347
  0.347
  0.347
  0.347
  0.347
  0.347
  0.347
  0.347
  0.347
  0.347
  0.347
  0.347
  0.347
  0.347
  0.347
  0.347
  0.347

CASH FLOW

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Net income, $m
  -7
  -7
  -8
  -9
  -10
  -11
  -12
  -13
  -15
  -16
  -17
  -18
  -20
  -21
  -23
  -24
  -26
  -28
  -30
  -32
  -34
  -36
  -38
  -40
  -42
  -45
  -47
  -50
  -53
  -55
Depreciation, amort., depletion, $m
  6
  6
  7
  8
  9
  10
  11
  13
  14
  15
  16
  17
  19
  20
  22
  24
  25
  27
  29
  31
  33
  35
  37
  39
  42
  44
  47
  49
  52
  55
Funds from operations, $m
  -1
  -1
  -1
  -1
  -1
  -1
  -1
  -1
  -1
  -1
  -1
  -1
  -1
  -1
  -1
  -1
  -1
  -1
  -1
  -1
  -1
  -1
  -1
  -1
  -1
  -1
  0
  0
  0
  0
Change in working capital, $m
  1
  1
  1
  1
  2
  2
  2
  2
  2
  2
  2
  2
  2
  2
  2
  3
  3
  3
  3
  3
  3
  3
  3
  4
  4
  4
  4
  4
  4
  5
Cash from operations, $m
  -3
  -2
  -2
  -2
  -2
  -2
  -3
  -3
  -3
  -3
  -3
  -3
  -3
  -3
  -3
  -3
  -3
  -4
  -4
  -4
  -4
  -4
  -4
  -4
  -4
  -4
  -5
  -5
  -5
  -5
Maintenance CAPEX, $m
  -4
  -5
  -6
  -7
  -8
  -9
  -10
  -11
  -12
  -13
  -15
  -16
  -17
  -19
  -20
  -22
  -24
  -25
  -27
  -29
  -31
  -33
  -35
  -37
  -39
  -42
  -44
  -47
  -49
  -52
New CAPEX, $m
  -11
  -14
  -15
  -16
  -17
  -18
  -20
  -21
  -22
  -23
  -24
  -25
  -26
  -27
  -28
  -29
  -30
  -31
  -32
  -33
  -35
  -36
  -38
  -39
  -41
  -43
  -45
  -46
  -48
  -51
Cash from investing activities, $m
  -15
  -19
  -21
  -23
  -25
  -27
  -30
  -32
  -34
  -36
  -39
  -41
  -43
  -46
  -48
  -51
  -54
  -56
  -59
  -62
  -66
  -69
  -73
  -76
  -80
  -85
  -89
  -93
  -97
  -103
Free cash flow, $m
  -18
  -21
  -23
  -25
  -28
  -30
  -32
  -34
  -36
  -39
  -41
  -43
  -46
  -49
  -51
  -54
  -57
  -60
  -63
  -66
  -70
  -73
  -77
  -81
  -85
  -89
  -93
  -98
  -103
  -108
Issuance/(repayment) of debt, $m
  16
  20
  22
  24
  25
  27
  28
  30
  31
  32
  34
  35
  37
  38
  40
  41
  43
  45
  46
  48
  50
  52
  54
  57
  59
  61
  64
  67
  70
  73
Issuance/(repurchase) of shares, $m
  15
  18
  20
  22
  23
  25
  27
  29
  31
  33
  35
  37
  39
  41
  44
  46
  49
  52
  54
  57
  60
  63
  67
  70
  74
  77
  81
  85
  90
  94
Cash from financing (excl. dividends), $m  
  31
  38
  42
  46
  48
  52
  55
  59
  62
  65
  69
  72
  76
  79
  84
  87
  92
  97
  100
  105
  110
  115
  121
  127
  133
  138
  145
  152
  160
  167
Total cash flow (excl. dividends), $m
  13
  17
  18
  20
  21
  22
  23
  25
  26
  27
  28
  29
  30
  31
  32
  34
  35
  36
  38
  39
  41
  42
  44
  46
  48
  50
  52
  54
  57
  59
Retained Cash Flow (-), $m
  -15
  -18
  -20
  -22
  -23
  -25
  -27
  -29
  -31
  -33
  -35
  -37
  -39
  -41
  -44
  -46
  -49
  -52
  -54
  -57
  -60
  -63
  -67
  -70
  -74
  -77
  -81
  -85
  -90
  -94
Prev. year cash balance distribution, $m
  19
  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
  17
  -1
  -1
  -2
  -2
  -3
  -4
  -4
  -5
  -6
  -7
  -8
  -9
  -10
  -11
  -13
  -14
  -15
  -17
  -18
  -19
  -21
  -22
  -24
  -26
  -27
  -29
  -31
  -33
  -35
Discount rate, %
  8.40
  8.82
  9.26
  9.72
  10.21
  10.72
  11.26
  11.82
  12.41
  13.03
  13.68
  14.37
  15.09
  15.84
  16.63
  17.46
  18.34
  19.25
  20.22
  21.23
  22.29
  23.40
  24.57
  25.80
  27.09
  28.45
  29.87
  31.36
  32.93
  34.58
PV of cash for distribution, $m
  16
  -1
  -1
  -1
  -2
  -2
  -2
  -2
  -2
  -2
  -2
  -2
  -1
  -1
  -1
  -1
  -1
  -1
  -1
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
Current shareholders' claim on cash, %
  81.3
  65.6
  53.5
  44.0
  36.6
  30.6
  25.8
  21.9
  18.7
  16.0
  13.8
  12.0
  10.4
  9.1
  7.9
  7.0
  6.1
  5.4
  4.7
  4.2
  3.7
  3.3
  2.9
  2.6
  2.3
  2.0
  1.8
  1.6
  1.4
  1.3

Ellomay Capital Ltd. is engaged in the business of energy and infrastructure, and its operations primarily include production of renewable and clean energy. The Company owns approximately 16 photovoltaic (PV) plants that are connected to their respective national grids and operates as over 12 photovoltaic plants in Italy with an aggregate installed capacity of over 22.6 megawatt peak (MWp) and over four photovoltaic plants in Spain with an aggregate installed capacity of approximately 7.9 MWp. In addition, it owns an interest in Dorad Energy Ltd. (Dorad), and holds an option to increase its indirect holdings in Dorad under certain conditions. Dorad operates the Dorad Power Plant, a combined cycle power plant based on natural gas, with a production capacity of approximately 850 megawatts, located south of Ashkelon. It operates in Italy and in Spain through its subsidiaries that own over 16 PV Plants, and in Israel primarily through U. Dori Energy Infrastructures Ltd. (Dori Energy).

FINANCIAL RATIOS  of  Ellomay Capital (ELLO)

Valuation Ratios
P/E Ratio -88.3
Price to Sales 6.8
Price to Book 1
Price to Tangible Book
Price to Cash Flow 11
Price to Free Cash Flow 29.4
Growth Rates
Sales Growth Rate -7.1%
Sales - 3 Yr. Growth Rate %
EPS Growth Rate %
EPS - 3 Yr. Growth Rate %
Capital Spending Gr. Rate NaN%
Cap. Spend. - 3 Yr. Gr. Rate -11.1%
Financial Strength
Quick Ratio 4
Current Ratio 0
LT Debt to Equity 58.9%
Total Debt to Equity 65.6%
Interest Coverage 1
Management Effectiveness
Return On Assets 1.3%
Ret/ On Assets - 3 Yr. Avg. 5.4%
Return On Total Capital -0.7%
Ret/ On T. Cap. - 3 Yr. Avg. 3.2%
Return On Equity -1.1%
Return On Equity - 3 Yr. Avg. 4.9%
Asset Turnover 0.1
Profitability Ratios
Gross Margin 46.2%
Gross Margin - 3 Yr. Avg. 44.3%
EBITDA Margin 61.5%
EBITDA Margin - 3 Yr. Avg. 84.8%
Operating Margin 23.1%
Oper. Margin - 3 Yr. Avg. 40.4%
Pre-Tax Margin 0%
Pre-Tax Margin - 3 Yr. Avg. 26.5%
Net Profit Margin -7.7%
Net Profit Margin - 3 Yr. Avg. 31.1%
Effective Tax Rate 0%
Eff/ Tax Rate - 3 Yr. Avg. -13.3%
Payout Ratio -200%

ELLO stock valuation input parameters

Revenue. Company's revenue (or sales) is always the starting point of any cash flow forecast. In the ELLO stock intrinsic value calculation we used $13.636 million for the last fiscal year's total revenue generated by Ellomay Capital. The default revenue input number comes from 0001 income statement of Ellomay Capital. 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 ELLO stock valuation model: a) initial revenue growth rate of 17.2% 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 8.4%, whose default value for ELLO is calculated based on our internal credit rating of Ellomay Capital, 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 Ellomay Capital.
    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 ELLO stock the variable cost ratio is equal to 64.3%.

Fixed operating expenses is just that - expenses that are not dependant on the volume of production. They are set to $3 million in the base year in the intrinsic value calculation for ELLO 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 9.1% for Ellomay Capital.

Corporate tax rate of 27% is the nominal tax rate for Ellomay Capital. 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 ELLO 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 ELLO are equal to 553.1%.

Life of production assets of 17.4 years is the average useful life of capital assets used in Ellomay Capital 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 ELLO is equal to 50%. 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 - $78.641 million for Ellomay Capital - 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 10.676 million for Ellomay Capital 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 Ellomay Capital at the current share price and the inputted number of shares is $0.1 billion.

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COMPANY NEWS

▶ Ellomay: 1Q Earnings Snapshot   [Jun-21-18 04:47PM  Associated Press]
▶ Ellomay reports 4Q loss   [Mar-29-18 06:16PM  Associated Press]
▶ Ellomay posts 3Q profit   [Dec-19-17 04:39PM  Associated Press]
▶ All You Need To Know About Ellomay Capital Ltds (ELLO) Risks   [Oct-16-17 11:37AM  Simply Wall St.]
▶ Ellomay reports 2Q loss   [Sep-18-17 07:32PM  Associated Press]
▶ Ellomay reports 1Q loss   [Jun-21-17 08:59PM  Associated Press]
▶ Ellomay posts 4Q profit   [06:36AM  Associated Press]

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