Intrinsic value of Era Group, Inc. - ERA

Previous Close

$11.40

  Intrinsic Value

$5.31

stock screener

  Rating & Target

str. sell

-53%

Previous close

$11.40

 
Intrinsic value

$5.31

 
Up/down potential

-53%

 
Rating

str. sell

We calculate the intrinsic value of ERA 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 0.2

 

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
  226
  232
  238
  244
  252
  260
  269
  278
  289
  300
  311
  324
  338
  352
  367
  383
  400
  418
  437
  457
  479
  501
  524
  549
  575
  603
  632
  662
  694
  728
Variable operating expenses, $m
  360
  368
  378
  388
  400
  413
  427
  442
  459
  476
  495
  515
  537
  559
  583
  609
  636
  665
  695
  727
  761
  796
  834
  873
  915
  958
  1,004
  1,053
  1,104
  1,158
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
  360
  368
  378
  388
  400
  413
  427
  442
  459
  476
  495
  515
  537
  559
  583
  609
  636
  665
  695
  727
  761
  796
  834
  873
  915
  958
  1,004
  1,053
  1,104
  1,158
Operating income, $m
  -134
  -137
  -140
  -144
  -148
  -153
  -158
  -164
  -170
  -177
  -184
  -191
  -199
  -207
  -216
  -226
  -236
  -247
  -258
  -270
  -282
  -295
  -309
  -324
  -339
  -355
  -373
  -391
  -409
  -429
EBITDA, $m
  -93
  -95
  -98
  -100
  -104
  -107
  -110
  -114
  -119
  -123
  -128
  -133
  -139
  -145
  -151
  -158
  -165
  -172
  -180
  -188
  -197
  -206
  -216
  -226
  -237
  -248
  -260
  -272
  -286
  -300
Interest expense (income), $m
  15
  13
  14
  14
  15
  16
  17
  17
  18
  19
  21
  22
  23
  25
  26
  28
  29
  31
  33
  35
  37
  39
  42
  44
  47
  49
  52
  55
  59
  62
  65
Earnings before tax, $m
  -147
  -150
  -155
  -159
  -164
  -170
  -176
  -183
  -190
  -197
  -205
  -214
  -224
  -233
  -244
  -255
  -267
  -279
  -293
  -307
  -321
  -337
  -353
  -370
  -389
  -408
  -428
  -449
  -471
  -495
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
  -147
  -150
  -155
  -159
  -164
  -170
  -176
  -183
  -190
  -197
  -205
  -214
  -224
  -233
  -244
  -255
  -267
  -279
  -293
  -307
  -321
  -337
  -353
  -370
  -389
  -408
  -428
  -449
  -471
  -495

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
  755
  772
  792
  814
  839
  866
  896
  927
  962
  999
  1,038
  1,080
  1,125
  1,173
  1,224
  1,277
  1,334
  1,394
  1,457
  1,524
  1,595
  1,670
  1,748
  1,831
  1,918
  2,010
  2,106
  2,208
  2,315
  2,427
Adjusted assets (=assets-cash), $m
  755
  772
  792
  814
  839
  866
  896
  927
  962
  999
  1,038
  1,080
  1,125
  1,173
  1,224
  1,277
  1,334
  1,394
  1,457
  1,524
  1,595
  1,670
  1,748
  1,831
  1,918
  2,010
  2,106
  2,208
  2,315
  2,427
Revenue / Adjusted assets
  0.299
  0.301
  0.301
  0.300
  0.300
  0.300
  0.300
  0.300
  0.300
  0.300
  0.300
  0.300
  0.300
  0.300
  0.300
  0.300
  0.300
  0.300
  0.300
  0.300
  0.300
  0.300
  0.300
  0.300
  0.300
  0.300
  0.300
  0.300
  0.300
  0.300
Average production assets, $m
  650
  665
  682
  701
  722
  746
  771
  799
  828
  860
  894
  930
  969
  1,010
  1,053
  1,100
  1,149
  1,200
  1,255
  1,312
  1,373
  1,437
  1,505
  1,576
  1,651
  1,730
  1,814
  1,901
  1,993
  2,090
Working capital, $m
  39
  40
  41
  42
  44
  45
  46
  48
  50
  52
  54
  56
  58
  61
  64
  66
  69
  72
  76
  79
  83
  87
  91
  95
  100
  104
  109
  115
  120
  126
Total debt, $m
  168
  175
  183
  192
  202
  213
  225
  238
  252
  266
  282
  299
  318
  337
  357
  379
  402
  426
  452
  479
  507
  537
  569
  603
  638
  675
  714
  755
  798
  844
Total liabilities, $m
  305
  312
  320
  329
  339
  350
  362
  375
  389
  404
  419
  436
  455
  474
  494
  516
  539
  563
  589
  616
  644
  674
  706
  740
  775
  812
  851
  892
  935
  981
Total equity, $m
  450
  460
  472
  485
  500
  516
  534
  553
  573
  595
  619
  644
  671
  699
  729
  761
  795
  831
  869
  909
  951
  995
  1,042
  1,091
  1,143
  1,198
  1,255
  1,316
  1,380
  1,447
Total liabilities and equity, $m
  755
  772
  792
  814
  839
  866
  896
  928
  962
  999
  1,038
  1,080
  1,126
  1,173
  1,223
  1,277
  1,334
  1,394
  1,458
  1,525
  1,595
  1,669
  1,748
  1,831
  1,918
  2,010
  2,106
  2,208
  2,315
  2,428
Debt-to-equity ratio
  0.370
  0.380
  0.390
  0.400
  0.400
  0.410
  0.420
  0.430
  0.440
  0.450
  0.460
  0.460
  0.470
  0.480
  0.490
  0.500
  0.510
  0.510
  0.520
  0.530
  0.530
  0.540
  0.550
  0.550
  0.560
  0.560
  0.570
  0.570
  0.580
  0.580
Adjusted equity ratio
  0.596
  0.596
  0.596
  0.596
  0.596
  0.596
  0.596
  0.596
  0.596
  0.596
  0.596
  0.596
  0.596
  0.596
  0.596
  0.596
  0.596
  0.596
  0.596
  0.596
  0.596
  0.596
  0.596
  0.596
  0.596
  0.596
  0.596
  0.596
  0.596
  0.596

CASH FLOW

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Net income, $m
  -147
  -150
  -155
  -159
  -164
  -170
  -176
  -183
  -190
  -197
  -205
  -214
  -224
  -233
  -244
  -255
  -267
  -279
  -293
  -307
  -321
  -337
  -353
  -370
  -389
  -408
  -428
  -449
  -471
  -495
Depreciation, amort., depletion, $m
  40
  41
  42
  44
  45
  46
  48
  50
  52
  54
  56
  58
  60
  63
  65
  68
  71
  75
  78
  82
  85
  89
  93
  98
  103
  107
  113
  118
  124
  130
Funds from operations, $m
  -106
  -109
  -112
  -115
  -119
  -123
  -128
  -133
  -138
  -144
  -150
  -156
  -163
  -171
  -179
  -187
  -196
  -205
  -215
  -225
  -236
  -248
  -260
  -273
  -286
  -300
  -315
  -331
  -348
  -365
Change in working capital, $m
  1
  1
  1
  1
  1
  1
  2
  2
  2
  2
  2
  2
  2
  2
  3
  3
  3
  3
  3
  3
  4
  4
  4
  4
  5
  5
  5
  5
  6
  6
Cash from operations, $m
  -107
  -110
  -113
  -117
  -121
  -125
  -129
  -135
  -140
  -146
  -152
  -159
  -166
  -173
  -181
  -190
  -199
  -208
  -218
  -229
  -240
  -251
  -264
  -277
  -291
  -305
  -320
  -336
  -353
  -371
Maintenance CAPEX, $m
  -40
  -40
  -41
  -42
  -44
  -45
  -46
  -48
  -50
  -51
  -53
  -56
  -58
  -60
  -63
  -65
  -68
  -71
  -75
  -78
  -82
  -85
  -89
  -93
  -98
  -103
  -107
  -113
  -118
  -124
New CAPEX, $m
  -13
  -15
  -17
  -19
  -21
  -23
  -25
  -27
  -30
  -32
  -34
  -36
  -39
  -41
  -44
  -46
  -49
  -52
  -55
  -58
  -61
  -64
  -68
  -71
  -75
  -79
  -83
  -88
  -92
  -97
Cash from investing activities, $m
  -53
  -55
  -58
  -61
  -65
  -68
  -71
  -75
  -80
  -83
  -87
  -92
  -97
  -101
  -107
  -111
  -117
  -123
  -130
  -136
  -143
  -149
  -157
  -164
  -173
  -182
  -190
  -201
  -210
  -221
Free cash flow, $m
  -160
  -165
  -171
  -178
  -185
  -193
  -201
  -210
  -219
  -229
  -239
  -250
  -262
  -274
  -288
  -301
  -316
  -331
  -347
  -364
  -382
  -401
  -421
  -442
  -464
  -487
  -511
  -536
  -563
  -591
Issuance/(repayment) of debt, $m
  6
  7
  8
  9
  10
  11
  12
  13
  14
  15
  16
  17
  18
  19
  20
  22
  23
  24
  26
  27
  29
  30
  32
  33
  35
  37
  39
  41
  43
  45
Issuance/(repurchase) of shares, $m
  155
  161
  166
  172
  179
  186
  194
  202
  210
  219
  229
  239
  250
  262
  274
  287
  301
  315
  330
  347
  363
  381
  400
  420
  441
  462
  485
  510
  535
  562
Cash from financing (excl. dividends), $m  
  161
  168
  174
  181
  189
  197
  206
  215
  224
  234
  245
  256
  268
  281
  294
  309
  324
  339
  356
  374
  392
  411
  432
  453
  476
  499
  524
  551
  578
  607
Total cash flow (excl. dividends), $m
  1
  3
  3
  3
  4
  4
  4
  5
  5
  5
  6
  6
  6
  7
  7
  8
  8
  8
  9
  9
  10
  10
  11
  12
  12
  13
  14
  14
  15
  16
Retained Cash Flow (-), $m
  -155
  -161
  -166
  -172
  -179
  -186
  -194
  -202
  -210
  -219
  -229
  -239
  -250
  -262
  -274
  -287
  -301
  -315
  -330
  -347
  -363
  -381
  -400
  -420
  -441
  -462
  -485
  -510
  -535
  -562
Prev. year cash balance distribution, $m
  22
  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
  -132
  -158
  -163
  -169
  -175
  -182
  -189
  -197
  -205
  -214
  -223
  -233
  -244
  -255
  -267
  -280
  -293
  -307
  -322
  -337
  -354
  -371
  -389
  -408
  -428
  -450
  -472
  -495
  -520
  -546
Discount rate, %
  4.30
  4.52
  4.74
  4.98
  5.23
  5.49
  5.76
  6.05
  6.35
  6.67
  7.00
  7.35
  7.72
  8.11
  8.51
  8.94
  9.39
  9.86
  10.35
  10.87
  11.41
  11.98
  12.58
  13.21
  13.87
  14.56
  15.29
  16.05
  16.86
  17.70
PV of cash for distribution, $m
  -127
  -145
  -142
  -139
  -136
  -132
  -128
  -123
  -118
  -112
  -106
  -100
  -93
  -86
  -78
  -71
  -64
  -57
  -50
  -43
  -37
  -31
  -25
  -21
  -17
  -13
  -10
  -8
  -6
  -4
Current shareholders' claim on cash, %
  66.6
  44.1
  29.1
  19.1
  12.5
  8.2
  5.3
  3.5
  2.2
  1.4
  0.9
  0.6
  0.4
  0.2
  0.2
  0.1
  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

Era Group Inc. is engaged in operating helicopters. The Company's helicopters transport personnel to, from and between offshore oil and gas production platforms, drilling rigs and other installations. The Company also dry-leases helicopters to third-party helicopter operators and foreign affiliates. The primary users of the Company's helicopter services are international, integrated and independent oil and gas exploration, development and production companies. In addition to serving the oil and gas industry, it provides air medical services; utility services, including support of firefighting, mining, power line and pipeline survey activities, and Alaska flightseeing tours, among other activities. It owns and operates a range of classes of helicopters, such as Heavy helicopters, Medium helicopters and Light helicopters. Heavy helicopters have twin engines and passenger capacity ranging from 16 to 19. Medium helicopters have twin engines and passenger capacity ranging from 11 to 12.

FINANCIAL RATIOS  of  Era Group, Inc. (ERA)

Valuation Ratios
P/E Ratio -29.8
Price to Sales 1
Price to Book 0.5
Price to Tangible Book
Price to Cash Flow 4
Price to Free Cash Flow 11.9
Growth Rates
Sales Growth Rate -12.4%
Sales - 3 Yr. Growth Rate %
EPS Growth Rate %
EPS - 3 Yr. Growth Rate %
Capital Spending Gr. Rate -35%
Cap. Spend. - 3 Yr. Gr. Rate -18.7%
Financial Strength
Quick Ratio 14
Current Ratio 0.2
LT Debt to Equity 49.1%
Total Debt to Equity 49.6%
Interest Coverage 0
Management Effectiveness
Return On Assets 0.5%
Ret/ On Assets - 3 Yr. Avg. 1.5%
Return On Total Capital -1.1%
Ret/ On T. Cap. - 3 Yr. Avg. 0.8%
Return On Equity -1.7%
Return On Equity - 3 Yr. Avg. 1.3%
Asset Turnover 0.3
Profitability Ratios
Gross Margin 31.2%
Gross Margin - 3 Yr. Avg. 36.2%
EBITDA Margin 18.2%
EBITDA Margin - 3 Yr. Avg. 24.3%
Operating Margin -1.2%
Oper. Margin - 3 Yr. Avg. 6.7%
Pre-Tax Margin -7.7%
Pre-Tax Margin - 3 Yr. Avg. 2.6%
Net Profit Margin -3.2%
Net Profit Margin - 3 Yr. Avg. 1.7%
Effective Tax Rate 15.8%
Eff/ Tax Rate - 3 Yr. Avg. 37.8%
Payout Ratio 0%

ERA stock valuation input parameters

Revenue. Company's revenue (or sales) is always the starting point of any cash flow forecast. In the ERA stock intrinsic value calculation we used $222 million for the last fiscal year's total revenue generated by Era Group, Inc.. The default revenue input number comes from 0001 income statement of Era Group, 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 ERA 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 4.3%, whose default value for ERA is calculated based on our internal credit rating of Era Group, 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 Era Group, 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 ERA stock the variable cost ratio is equal to 159%.

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 ERA 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 8.2% for Era Group, Inc..

Corporate tax rate of 27% is the nominal tax rate for Era Group, 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 ERA 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 ERA are equal to 287%.

Life of production assets of 16.1 years is the average useful life of capital assets used in Era Group, 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 ERA is equal to 17.3%. 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 - $463.436 million for Era Group, 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 21.790 million for Era Group, 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 Era Group, Inc. at the current share price and the inputted number of shares is $0.2 billion.

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