Intrinsic value of Exterran Corporation - EXTN

Previous Close

$17.34

  Intrinsic Value

$6.46

stock screener

  Rating & Target

str. sell

-63%

Previous close

$17.34

 
Intrinsic value

$6.46

 
Up/down potential

-63%

 
Rating

str. sell

We calculate the intrinsic value of EXTN 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
  1,388
  1,420
  1,457
  1,498
  1,543
  1,593
  1,647
  1,706
  1,769
  1,837
  1,910
  1,987
  2,070
  2,157
  2,250
  2,349
  2,453
  2,564
  2,680
  2,804
  2,934
  3,071
  3,215
  3,367
  3,528
  3,696
  3,874
  4,061
  4,258
  4,464
Variable operating expenses, $m
  1,221
  1,249
  1,281
  1,317
  1,357
  1,400
  1,448
  1,499
  1,554
  1,614
  1,668
  1,736
  1,808
  1,885
  1,966
  2,052
  2,143
  2,240
  2,342
  2,449
  2,563
  2,683
  2,809
  2,942
  3,082
  3,229
  3,385
  3,548
  3,720
  3,901
Fixed operating expenses, $m
  99
  101
  104
  106
  108
  111
  113
  115
  118
  121
  123
  126
  129
  132
  134
  137
  140
  144
  147
  150
  153
  157
  160
  164
  167
  171
  175
  178
  182
  186
Total operating expenses, $m
  1,320
  1,350
  1,385
  1,423
  1,465
  1,511
  1,561
  1,614
  1,672
  1,735
  1,791
  1,862
  1,937
  2,017
  2,100
  2,189
  2,283
  2,384
  2,489
  2,599
  2,716
  2,840
  2,969
  3,106
  3,249
  3,400
  3,560
  3,726
  3,902
  4,087
Operating income, $m
  68
  69
  72
  75
  78
  82
  86
  91
  97
  103
  118
  125
  133
  141
  150
  159
  169
  180
  192
  204
  217
  231
  246
  262
  278
  296
  315
  335
  355
  378
EBITDA, $m
  197
  202
  208
  214
  221
  230
  239
  249
  260
  272
  285
  298
  313
  329
  346
  364
  384
  404
  426
  449
  473
  499
  527
  556
  586
  619
  653
  689
  727
  767
Interest expense (income), $m
  29
  31
  32
  34
  36
  38
  41
  44
  47
  50
  54
  58
  62
  66
  71
  76
  81
  87
  92
  99
  105
  112
  120
  127
  136
  144
  153
  163
  173
  183
  195
Earnings before tax, $m
  37
  37
  38
  39
  40
  41
  43
  45
  47
  49
  60
  63
  67
  70
  74
  78
  83
  88
  93
  99
  105
  112
  119
  126
  134
  143
  152
  162
  172
  183
Tax expense, $m
  10
  10
  10
  10
  11
  11
  12
  12
  13
  13
  16
  17
  18
  19
  20
  21
  22
  24
  25
  27
  28
  30
  32
  34
  36
  39
  41
  44
  46
  49
Net income, $m
  27
  27
  28
  28
  29
  30
  31
  33
  34
  36
  44
  46
  49
  51
  54
  57
  61
  64
  68
  72
  77
  82
  87
  92
  98
  104
  111
  118
  126
  134

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
  1,597
  1,634
  1,676
  1,723
  1,776
  1,833
  1,895
  1,963
  2,036
  2,114
  2,197
  2,287
  2,382
  2,483
  2,590
  2,703
  2,823
  2,950
  3,084
  3,226
  3,376
  3,533
  3,700
  3,875
  4,059
  4,254
  4,458
  4,673
  4,899
  5,137
Adjusted assets (=assets-cash), $m
  1,597
  1,634
  1,676
  1,723
  1,776
  1,833
  1,895
  1,963
  2,036
  2,114
  2,197
  2,287
  2,382
  2,483
  2,590
  2,703
  2,823
  2,950
  3,084
  3,226
  3,376
  3,533
  3,700
  3,875
  4,059
  4,254
  4,458
  4,673
  4,899
  5,137
Revenue / Adjusted assets
  0.869
  0.869
  0.869
  0.869
  0.869
  0.869
  0.869
  0.869
  0.869
  0.869
  0.869
  0.869
  0.869
  0.869
  0.869
  0.869
  0.869
  0.869
  0.869
  0.869
  0.869
  0.869
  0.869
  0.869
  0.869
  0.869
  0.869
  0.869
  0.869
  0.869
Average production assets, $m
  920
  942
  966
  993
  1,023
  1,056
  1,092
  1,131
  1,173
  1,218
  1,266
  1,317
  1,372
  1,430
  1,492
  1,557
  1,627
  1,700
  1,777
  1,859
  1,945
  2,036
  2,132
  2,232
  2,339
  2,451
  2,568
  2,692
  2,823
  2,960
Working capital, $m
  92
  94
  96
  99
  102
  105
  109
  113
  117
  121
  126
  131
  137
  142
  149
  155
  162
  169
  177
  185
  194
  203
  212
  222
  233
  244
  256
  268
  281
  295
Total debt, $m
  423
  447
  474
  505
  538
  576
  616
  660
  707
  757
  811
  869
  930
  996
  1,065
  1,138
  1,216
  1,298
  1,385
  1,477
  1,574
  1,676
  1,783
  1,897
  2,016
  2,142
  2,274
  2,413
  2,560
  2,714
Total liabilities, $m
  1,034
  1,057
  1,085
  1,115
  1,149
  1,186
  1,226
  1,270
  1,317
  1,368
  1,422
  1,479
  1,541
  1,606
  1,675
  1,749
  1,827
  1,909
  1,996
  2,087
  2,184
  2,286
  2,394
  2,507
  2,626
  2,752
  2,884
  3,023
  3,170
  3,324
Total equity, $m
  564
  577
  592
  608
  627
  647
  669
  693
  719
  746
  776
  807
  841
  876
  914
  954
  997
  1,041
  1,089
  1,139
  1,192
  1,247
  1,306
  1,368
  1,433
  1,502
  1,574
  1,650
  1,729
  1,814
Total liabilities and equity, $m
  1,598
  1,634
  1,677
  1,723
  1,776
  1,833
  1,895
  1,963
  2,036
  2,114
  2,198
  2,286
  2,382
  2,482
  2,589
  2,703
  2,824
  2,950
  3,085
  3,226
  3,376
  3,533
  3,700
  3,875
  4,059
  4,254
  4,458
  4,673
  4,899
  5,138
Debt-to-equity ratio
  0.750
  0.770
  0.800
  0.830
  0.860
  0.890
  0.920
  0.950
  0.980
  1.010
  1.050
  1.080
  1.110
  1.140
  1.170
  1.190
  1.220
  1.250
  1.270
  1.300
  1.320
  1.340
  1.370
  1.390
  1.410
  1.430
  1.440
  1.460
  1.480
  1.500
Adjusted equity ratio
  0.353
  0.353
  0.353
  0.353
  0.353
  0.353
  0.353
  0.353
  0.353
  0.353
  0.353
  0.353
  0.353
  0.353
  0.353
  0.353
  0.353
  0.353
  0.353
  0.353
  0.353
  0.353
  0.353
  0.353
  0.353
  0.353
  0.353
  0.353
  0.353
  0.353

CASH FLOW

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Net income, $m
  27
  27
  28
  28
  29
  30
  31
  33
  34
  36
  44
  46
  49
  51
  54
  57
  61
  64
  68
  72
  77
  82
  87
  92
  98
  104
  111
  118
  126
  134
Depreciation, amort., depletion, $m
  130
  132
  136
  139
  143
  148
  152
  157
  163
  169
  167
  173
  181
  188
  196
  205
  214
  224
  234
  245
  256
  268
  280
  294
  308
  322
  338
  354
  371
  389
Funds from operations, $m
  157
  160
  163
  168
  172
  178
  184
  190
  197
  205
  211
  220
  229
  239
  250
  262
  275
  288
  302
  317
  333
  349
  367
  386
  406
  427
  449
  472
  497
  523
Change in working capital, $m
  2
  2
  2
  3
  3
  3
  4
  4
  4
  4
  5
  5
  5
  6
  6
  7
  7
  7
  8
  8
  9
  9
  10
  10
  11
  11
  12
  12
  13
  14
Cash from operations, $m
  155
  158
  161
  165
  169
  174
  180
  186
  193
  200
  206
  215
  224
  234
  244
  256
  268
  281
  294
  309
  324
  340
  358
  376
  395
  416
  437
  460
  484
  509
Maintenance CAPEX, $m
  -119
  -121
  -124
  -127
  -131
  -135
  -139
  -144
  -149
  -154
  -160
  -167
  -173
  -181
  -188
  -196
  -205
  -214
  -224
  -234
  -245
  -256
  -268
  -280
  -294
  -308
  -322
  -338
  -354
  -371
New CAPEX, $m
  -18
  -21
  -24
  -27
  -30
  -33
  -36
  -39
  -42
  -45
  -48
  -51
  -55
  -58
  -62
  -65
  -69
  -73
  -77
  -82
  -86
  -91
  -96
  -101
  -106
  -112
  -118
  -124
  -130
  -137
Cash from investing activities, $m
  -137
  -142
  -148
  -154
  -161
  -168
  -175
  -183
  -191
  -199
  -208
  -218
  -228
  -239
  -250
  -261
  -274
  -287
  -301
  -316
  -331
  -347
  -364
  -381
  -400
  -420
  -440
  -462
  -484
  -508
Free cash flow, $m
  18
  15
  13
  11
  9
  7
  5
  3
  2
  1
  -2
  -3
  -4
  -5
  -6
  -6
  -6
  -7
  -7
  -7
  -7
  -6
  -6
  -5
  -5
  -4
  -3
  -2
  -1
  1
Issuance/(repayment) of debt, $m
  19
  24
  27
  31
  34
  37
  40
  44
  47
  51
  54
  58
  61
  65
  69
  73
  78
  82
  87
  92
  97
  102
  108
  113
  119
  126
  132
  139
  146
  154
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  
  19
  24
  27
  31
  34
  37
  40
  44
  47
  51
  54
  58
  61
  65
  69
  73
  78
  82
  87
  92
  97
  102
  108
  113
  119
  126
  132
  139
  146
  154
Total cash flow (excl. dividends), $m
  38
  39
  40
  41
  42
  44
  45
  47
  49
  51
  52
  54
  57
  60
  64
  67
  71
  76
  80
  85
  90
  96
  102
  108
  115
  122
  129
  137
  146
  155
Retained Cash Flow (-), $m
  -11
  -13
  -15
  -17
  -18
  -20
  -22
  -24
  -26
  -28
  -30
  -31
  -34
  -36
  -38
  -40
  -42
  -45
  -47
  -50
  -53
  -56
  -59
  -62
  -65
  -69
  -72
  -76
  -80
  -84
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
  27
  26
  25
  24
  24
  24
  23
  23
  24
  24
  22
  23
  24
  25
  26
  27
  29
  31
  33
  35
  37
  40
  43
  46
  49
  53
  57
  61
  66
  71
Discount rate, %
  5.50
  5.78
  6.06
  6.37
  6.69
  7.02
  7.37
  7.74
  8.13
  8.53
  8.96
  9.41
  9.88
  10.37
  10.89
  11.43
  12.01
  12.61
  13.24
  13.90
  14.59
  15.32
  16.09
  16.89
  17.74
  18.62
  19.56
  20.53
  21.56
  22.64
PV of cash for distribution, $m
  25
  23
  21
  19
  17
  16
  14
  13
  12
  11
  9
  8
  7
  6
  5
  5
  4
  4
  3
  3
  2
  2
  1
  1
  1
  1
  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

Exterran Corporation provides compression, production and processing products and services that support the production and transportation of oil and natural gas around the world. The Company operates through three segments: contract operations, aftermarket services, and oil and gas product sales. The contract operations segment provides natural gas compression services, production and processing equipment services, and maintenance services to meet specific customer requirements on assets owned by it. The aftermarket services segment provides a range of services to support the surface production, compression and processing needs of customers, from parts sales and normal maintenance services to full operation of a customer's owned assets. The oil and gas product sales segment provides design, engineering, manufacturing, installation and sale of natural gas compression units, and accessories and equipment used in the production, treating and processing of crude oil and natural gas.

FINANCIAL RATIOS  of  Exterran Corporation (EXTN)

Valuation Ratios
P/E Ratio -2.7
Price to Sales 0.6
Price to Book 1.1
Price to Tangible Book
Price to Cash Flow 2.3
Price to Free Cash Flow 3.3
Growth Rates
Sales Growth Rate -42.5%
Sales - 3 Yr. Growth Rate %
EPS Growth Rate %
EPS - 3 Yr. Growth Rate %
Capital Spending Gr. Rate -52.9%
Cap. Spend. - 3 Yr. Gr. Rate -5.8%
Financial Strength
Quick Ratio NaN
Current Ratio 0.2
LT Debt to Equity 62.7%
Total Debt to Equity 62.7%
Interest Coverage -1
Management Effectiveness
Return On Assets -9.3%
Ret/ On Assets - 3 Yr. Avg. -0.9%
Return On Total Capital -20.4%
Ret/ On T. Cap. - 3 Yr. Avg. -3.4%
Return On Equity -33.5%
Return On Equity - 3 Yr. Avg. -7.6%
Asset Turnover 0.7
Profitability Ratios
Gross Margin 29.8%
Gross Margin - 3 Yr. Avg. 27.5%
EBITDA Margin 9.4%
EBITDA Margin - 3 Yr. Avg. 11%
Operating Margin -5.7%
Oper. Margin - 3 Yr. Avg. 0.7%
Pre-Tax Margin -6.8%
Pre-Tax Margin - 3 Yr. Avg. -0%
Net Profit Margin -22.2%
Net Profit Margin - 3 Yr. Avg. -5.1%
Effective Tax Rate -177.1%
Eff/ Tax Rate - 3 Yr. Avg. 79.9%
Payout Ratio 0%

EXTN stock valuation input parameters

Revenue. Company's revenue (or sales) is always the starting point of any cash flow forecast. In the EXTN stock intrinsic value calculation we used $1361 million for the last fiscal year's total revenue generated by Exterran Corporation. The default revenue input number comes from 0001 income statement of Exterran Corporation. 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 EXTN 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 5.5%, whose default value for EXTN is calculated based on our internal credit rating of Exterran Corporation, 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 Exterran Corporation.
    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 EXTN stock the variable cost ratio is equal to 88%.

Fixed operating expenses is just that - expenses that are not dependant on the volume of production. They are set to $97 million in the base year in the intrinsic value calculation for EXTN 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 7.6% for Exterran Corporation.

Corporate tax rate of 27% is the nominal tax rate for Exterran Corporation. 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 EXTN 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 EXTN are equal to 66.3%.

Life of production assets of 7.6 years is the average useful life of capital assets used in Exterran Corporation 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 EXTN is equal to 6.6%. 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 - $552.821 million for Exterran Corporation - 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 36.142 million for Exterran Corporation 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 Exterran Corporation at the current share price and the inputted number of shares is $0.6 billion.

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