Intrinsic value of FuelCell Energy, Inc. - FCEL

Previous Close

$0.35

  Intrinsic Value

$0.07

stock screener

  Rating & Target

str. sell

-81%

Previous close

$0.35

 
Intrinsic value

$0.07

 
Up/down potential

-81%

 
Rating

str. sell

We calculate the intrinsic value of FCEL 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 0.0

 

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
  91
  93
  95
  98
  101
  104
  108
  112
  116
  120
  125
  130
  135
  141
  147
  154
  160
  168
  175
  183
  192
  201
  210
  220
  231
  242
  253
  266
  278
  292
Variable operating expenses, $m
  89
  91
  93
  95
  98
  101
  104
  108
  112
  116
  115
  120
  125
  130
  136
  142
  148
  155
  162
  169
  177
  186
  194
  203
  213
  223
  234
  245
  257
  270
Fixed operating expenses, $m
  49
  50
  51
  52
  54
  55
  56
  57
  58
  60
  61
  62
  64
  65
  67
  68
  69
  71
  73
  74
  76
  77
  79
  81
  83
  85
  86
  88
  90
  92
Total operating expenses, $m
  138
  141
  144
  147
  152
  156
  160
  165
  170
  176
  176
  182
  189
  195
  203
  210
  217
  226
  235
  243
  253
  263
  273
  284
  296
  308
  320
  333
  347
  362
Operating income, $m
  -47
  -48
  -49
  -50
  -51
  -52
  -53
  -53
  -54
  -55
  -51
  -52
  -53
  -54
  -55
  -56
  -57
  -58
  -59
  -60
  -61
  -62
  -63
  -64
  -65
  -66
  -67
  -68
  -69
  -70
EBITDA, $m
  -34
  -35
  -36
  -37
  -37
  -38
  -38
  -39
  -40
  -40
  -41
  -41
  -42
  -42
  -43
  -43
  -44
  -44
  -44
  -45
  -45
  -45
  -45
  -45
  -45
  -45
  -45
  -45
  -45
  -45
Interest expense (income), $m
  2
  9
  9
  10
  11
  12
  12
  13
  14
  15
  17
  18
  19
  21
  22
  24
  26
  28
  30
  32
  34
  36
  39
  41
  44
  47
  50
  53
  56
  60
  63
Earnings before tax, $m
  -56
  -57
  -59
  -61
  -62
  -64
  -66
  -68
  -70
  -72
  -69
  -72
  -74
  -77
  -79
  -82
  -85
  -88
  -91
  -94
  -97
  -101
  -104
  -108
  -112
  -116
  -120
  -124
  -129
  -134
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
  -56
  -57
  -59
  -61
  -62
  -64
  -66
  -68
  -70
  -72
  -69
  -72
  -74
  -77
  -79
  -82
  -85
  -88
  -91
  -94
  -97
  -101
  -104
  -108
  -112
  -116
  -120
  -124
  -129
  -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
  345
  353
  362
  372
  384
  396
  410
  424
  440
  457
  475
  494
  515
  536
  560
  584
  610
  637
  666
  697
  729
  763
  799
  837
  877
  919
  963
  1,010
  1,059
  1,110
Adjusted assets (=assets-cash), $m
  345
  353
  362
  372
  384
  396
  410
  424
  440
  457
  475
  494
  515
  536
  560
  584
  610
  637
  666
  697
  729
  763
  799
  837
  877
  919
  963
  1,010
  1,059
  1,110
Revenue / Adjusted assets
  0.264
  0.263
  0.262
  0.263
  0.263
  0.263
  0.263
  0.264
  0.264
  0.263
  0.263
  0.263
  0.262
  0.263
  0.263
  0.264
  0.262
  0.264
  0.263
  0.263
  0.263
  0.263
  0.263
  0.263
  0.263
  0.263
  0.263
  0.263
  0.263
  0.263
Average production assets, $m
  54
  55
  56
  58
  60
  62
  64
  66
  68
  71
  74
  77
  80
  84
  87
  91
  95
  99
  104
  109
  114
  119
  124
  130
  137
  143
  150
  157
  165
  173
Working capital, $m
  44
  45
  46
  47
  48
  50
  52
  54
  56
  58
  60
  62
  65
  68
  71
  74
  77
  80
  84
  88
  92
  96
  101
  106
  111
  116
  122
  127
  134
  140
Total debt, $m
  95
  101
  108
  115
  124
  133
  144
  155
  167
  179
  193
  208
  223
  240
  257
  276
  295
  316
  338
  361
  386
  412
  439
  467
  498
  529
  563
  598
  635
  674
Total liabilities, $m
  261
  267
  274
  282
  290
  300
  310
  321
  333
  346
  359
  374
  390
  406
  424
  442
  462
  483
  505
  528
  552
  578
  605
  634
  664
  696
  729
  764
  801
  840
Total equity, $m
  84
  86
  88
  90
  93
  96
  100
  103
  107
  111
  115
  120
  125
  130
  136
  142
  148
  155
  162
  169
  177
  186
  194
  203
  213
  223
  234
  245
  257
  270
Total liabilities and equity, $m
  345
  353
  362
  372
  383
  396
  410
  424
  440
  457
  474
  494
  515
  536
  560
  584
  610
  638
  667
  697
  729
  764
  799
  837
  877
  919
  963
  1,009
  1,058
  1,110
Debt-to-equity ratio
  1.130
  1.180
  1.220
  1.280
  1.330
  1.390
  1.440
  1.500
  1.560
  1.620
  1.670
  1.730
  1.780
  1.840
  1.890
  1.940
  1.990
  2.040
  2.090
  2.130
  2.180
  2.220
  2.260
  2.300
  2.330
  2.370
  2.400
  2.440
  2.470
  2.500
Adjusted equity ratio
  0.243
  0.243
  0.243
  0.243
  0.243
  0.243
  0.243
  0.243
  0.243
  0.243
  0.243
  0.243
  0.243
  0.243
  0.243
  0.243
  0.243
  0.243
  0.243
  0.243
  0.243
  0.243
  0.243
  0.243
  0.243
  0.243
  0.243
  0.243
  0.243
  0.243

CASH FLOW

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Net income, $m
  -56
  -57
  -59
  -61
  -62
  -64
  -66
  -68
  -70
  -72
  -69
  -72
  -74
  -77
  -79
  -82
  -85
  -88
  -91
  -94
  -97
  -101
  -104
  -108
  -112
  -116
  -120
  -124
  -129
  -134
Depreciation, amort., depletion, $m
  13
  13
  13
  13
  13
  14
  14
  14
  15
  15
  11
  11
  12
  12
  13
  13
  14
  14
  15
  16
  16
  17
  18
  19
  20
  21
  22
  23
  24
  25
Funds from operations, $m
  -43
  -45
  -46
  -47
  -49
  -50
  -52
  -53
  -55
  -57
  -59
  -61
  -63
  -65
  -67
  -69
  -71
  -73
  -76
  -78
  -81
  -84
  -86
  -89
  -92
  -95
  -98
  -102
  -105
  -108
Change in working capital, $m
  1
  1
  1
  1
  1
  2
  2
  2
  2
  2
  2
  2
  3
  3
  3
  3
  3
  3
  4
  4
  4
  4
  5
  5
  5
  5
  6
  6
  6
  6
Cash from operations, $m
  -44
  -46
  -47
  -49
  -50
  -52
  -54
  -55
  -57
  -59
  -61
  -63
  -65
  -67
  -70
  -72
  -74
  -77
  -80
  -82
  -85
  -88
  -91
  -94
  -97
  -100
  -104
  -107
  -111
  -115
Maintenance CAPEX, $m
  -8
  -8
  -8
  -8
  -8
  -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
New CAPEX, $m
  -1
  -1
  -1
  -2
  -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
Cash from investing activities, $m
  -9
  -9
  -9
  -10
  -10
  -11
  -11
  -11
  -12
  -13
  -13
  -14
  -14
  -15
  -16
  -17
  -17
  -18
  -19
  -20
  -21
  -21
  -23
  -24
  -25
  -27
  -28
  -29
  -31
  -32
Free cash flow, $m
  -53
  -55
  -56
  -58
  -60
  -62
  -65
  -67
  -69
  -72
  -74
  -77
  -79
  -82
  -85
  -88
  -92
  -95
  -98
  -102
  -106
  -110
  -114
  -118
  -122
  -127
  -132
  -136
  -142
  -147
Issuance/(repayment) of debt, $m
  6
  6
  7
  8
  9
  9
  10
  11
  12
  13
  14
  15
  16
  17
  18
  19
  20
  21
  22
  23
  24
  26
  27
  29
  30
  32
  33
  35
  37
  39
Issuance/(repurchase) of shares, $m
  58
  59
  61
  63
  65
  67
  69
  71
  74
  76
  74
  76
  79
  82
  85
  88
  91
  94
  98
  102
  105
  109
  113
  117
  122
  126
  131
  136
  141
  146
Cash from financing (excl. dividends), $m  
  64
  65
  68
  71
  74
  76
  79
  82
  86
  89
  88
  91
  95
  99
  103
  107
  111
  115
  120
  125
  129
  135
  140
  146
  152
  158
  164
  171
  178
  185
Total cash flow (excl. dividends), $m
  10
  11
  12
  12
  13
  14
  15
  16
  16
  17
  13
  14
  15
  16
  17
  18
  19
  20
  21
  23
  24
  25
  27
  28
  30
  31
  33
  34
  36
  38
Retained Cash Flow (-), $m
  -58
  -59
  -61
  -63
  -65
  -67
  -69
  -71
  -74
  -76
  -74
  -76
  -79
  -82
  -85
  -88
  -91
  -94
  -98
  -102
  -105
  -109
  -113
  -117
  -122
  -126
  -131
  -136
  -141
  -146
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
  -47
  -49
  -50
  -51
  -52
  -53
  -54
  -56
  -57
  -59
  -60
  -62
  -64
  -66
  -68
  -70
  -72
  -74
  -76
  -79
  -81
  -84
  -86
  -89
  -92
  -95
  -98
  -101
  -105
  -108
Discount rate, %
  5.00
  5.25
  5.51
  5.79
  6.08
  6.38
  6.70
  7.04
  7.39
  7.76
  8.14
  8.55
  8.98
  9.43
  9.90
  10.39
  10.91
  11.46
  12.03
  12.63
  13.27
  13.93
  14.63
  15.36
  16.13
  16.93
  17.78
  18.67
  19.60
  20.58
PV of cash for distribution, $m
  -45
  -44
  -42
  -40
  -39
  -37
  -35
  -32
  -30
  -28
  -26
  -23
  -21
  -19
  -16
  -14
  -12
  -11
  -9
  -7
  -6
  -5
  -4
  -3
  -2
  -2
  -1
  -1
  -1
  0
Current shareholders' claim on cash, %
  50.0
  24.9
  12.3
  6.1
  3.0
  1.5
  0.7
  0.4
  0.2
  0.1
  0.0
  0.0
  0.0
  0.0
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Fuelcell Energy, Inc. delivers fuel cell power solutions. The Company is engaged in designing, manufacturing, installing, operating and maintaining fuel cell power solutions. The Company also provides turnkey power generation solutions to the customers, including power plant installation, operations and maintenance. The Company's segment is fuel cell power plant production and research. The Company offers its services to various sectors, including utility companies, municipalities, universities, government entities and a range of industrial and commercial enterprises. The Company, by utilizing its Direct FuelCell (DFC) plants, is commercializing a tri-generation distributed hydrogen configuration that generates electricity, heat and hydrogen for industrial and/or transportation uses, as well as a fuel cell carbon capture solution for coal or gas-fired power plants. The Company is also developing and commercializing solid oxide fuel cell (SOFC) plants for sub-megawatt applications.

FINANCIAL RATIOS  of  FuelCell Energy, Inc. (FCEL)

Valuation Ratios
P/E Ratio -0.2
Price to Sales 0.1
Price to Book 0.1
Price to Tangible Book
Price to Cash Flow -0.3
Price to Free Cash Flow -0.1
Growth Rates
Sales Growth Rate -33.7%
Sales - 3 Yr. Growth Rate %
EPS Growth Rate %
EPS - 3 Yr. Growth Rate %
Capital Spending Gr. Rate 485.7%
Cap. Spend. - 3 Yr. Gr. Rate 42.4%
Financial Strength
Quick Ratio 14
Current Ratio 0.2
LT Debt to Equity 53.4%
Total Debt to Equity 56.9%
Interest Coverage -25
Management Effectiveness
Return On Assets -15.9%
Ret/ On Assets - 3 Yr. Avg. -13.2%
Return On Total Capital -22.1%
Ret/ On T. Cap. - 3 Yr. Avg. -20.7%
Return On Equity -31%
Return On Equity - 3 Yr. Avg. -28.7%
Asset Turnover 0.3
Profitability Ratios
Gross Margin 0%
Gross Margin - 3 Yr. Avg. 5.3%
EBITDA Margin -40.7%
EBITDA Margin - 3 Yr. Avg. -24.4%
Operating Margin -43.5%
Oper. Margin - 3 Yr. Avg. -25.6%
Pre-Tax Margin -47.2%
Pre-Tax Margin - 3 Yr. Avg. -28.7%
Net Profit Margin -47.2%
Net Profit Margin - 3 Yr. Avg. -28.7%
Effective Tax Rate 0%
Eff/ Tax Rate - 3 Yr. Avg. -2%
Payout Ratio -7.8%

FCEL stock valuation input parameters

Revenue. Company's revenue (or sales) is always the starting point of any cash flow forecast. In the FCEL stock intrinsic value calculation we used $89 million for the last fiscal year's total revenue generated by FuelCell Energy, Inc.. The default revenue input number comes from 0001 income statement of FuelCell Energy, 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 FCEL 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%, whose default value for FCEL is calculated based on our internal credit rating of FuelCell Energy, 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 FuelCell Energy, 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 FCEL stock the variable cost ratio is equal to 97.8%.

Fixed operating expenses is just that - expenses that are not dependant on the volume of production. They are set to $48 million in the base year in the intrinsic value calculation for FCEL 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 10% for FuelCell Energy, Inc..

Corporate tax rate of 27% is the nominal tax rate for FuelCell Energy, 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 FCEL 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 FCEL are equal to 59.2%.

Life of production assets of 6.9 years is the average useful life of capital assets used in FuelCell Energy, 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 FCEL is equal to 48%. 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 - $82.194 million for FuelCell Energy, 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 129.507 million for FuelCell Energy, 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 FuelCell Energy, Inc. at the current share price and the inputted number of shares is $0.0 billion.

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