Intrinsic value of Foresight Energy LP - FELP

Previous Close

$0.36

  Intrinsic Value

$0.00

stock screener

  Rating & Target

str. sell

-100%

Previous close

$0.36

 
Intrinsic value

$0.00

 
Up/down potential

-100%

 
Rating

str. sell

We calculate the intrinsic value of FELP 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, %
  5.00
  5.00
  5.00
  5.00
  5.00
  5.00
  5.00
  5.00
  5.00
  5.00
  5.00
  5.00
  5.00
  5.00
  5.00
  5.00
  5.00
  5.00
  5.00
  5.00
  5.00
  5.00
  5.00
  5.00
  5.00
  5.00
  5.00
  5.00
  5.00
  5.00
Revenue, $m
  1,160
  1,218
  1,279
  1,343
  1,410
  1,481
  1,555
  1,633
  1,714
  1,800
  1,890
  1,984
  2,084
  2,188
  2,297
  2,412
  2,533
  2,659
  2,792
  2,932
  3,078
  3,232
  3,394
  3,564
  3,742
  3,929
  4,125
  4,332
  4,548
  4,776
Variable operating expenses, $m
  968
  1,016
  1,067
  1,120
  1,176
  1,235
  1,297
  1,361
  1,430
  1,501
  1,576
  1,655
  1,737
  1,824
  1,915
  2,011
  2,112
  2,217
  2,328
  2,445
  2,567
  2,695
  2,830
  2,972
  3,120
  3,276
  3,440
  3,612
  3,792
  3,982
Fixed operating expenses, $m
  103
  105
  108
  110
  113
  115
  118
  120
  123
  126
  128
  131
  134
  137
  140
  143
  146
  149
  153
  156
  160
  163
  167
  170
  174
  178
  182
  186
  190
  194
Total operating expenses, $m
  1,071
  1,121
  1,175
  1,230
  1,289
  1,350
  1,415
  1,481
  1,553
  1,627
  1,704
  1,786
  1,871
  1,961
  2,055
  2,154
  2,258
  2,366
  2,481
  2,601
  2,727
  2,858
  2,997
  3,142
  3,294
  3,454
  3,622
  3,798
  3,982
  4,176
Operating income, $m
  89
  97
  105
  113
  122
  131
  141
  151
  162
  173
  186
  199
  212
  227
  242
  258
  275
  292
  311
  331
  352
  374
  397
  422
  448
  475
  504
  534
  566
  600
EBITDA, $m
  312
  330
  350
  370
  392
  414
  438
  463
  490
  518
  547
  578
  611
  645
  681
  719
  759
  801
  846
  892
  941
  993
  1,047
  1,104
  1,164
  1,227
  1,293
  1,363
  1,436
  1,513
Interest expense (income), $m
  81
  140
  127
  138
  150
  162
  174
  188
  202
  216
  232
  248
  265
  283
  301
  321
  342
  363
  386
  410
  435
  461
  489
  518
  548
  580
  614
  649
  686
  725
  766
Earnings before tax, $m
  -51
  -30
  -34
  -37
  -40
  -44
  -47
  -51
  -54
  -58
  -62
  -66
  -70
  -75
  -79
  -84
  -89
  -94
  -99
  -104
  -109
  -115
  -121
  -126
  -133
  -139
  -145
  -152
  -159
  -166
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
  -51
  -30
  -34
  -37
  -40
  -44
  -47
  -51
  -54
  -58
  -62
  -66
  -70
  -75
  -79
  -84
  -89
  -94
  -99
  -104
  -109
  -115
  -121
  -126
  -133
  -139
  -145
  -152
  -159
  -166

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
  2,506
  2,631
  2,763
  2,901
  3,046
  3,198
  3,358
  3,526
  3,702
  3,888
  4,082
  4,286
  4,500
  4,725
  4,962
  5,210
  5,470
  5,744
  6,031
  6,332
  6,649
  6,981
  7,331
  7,697
  8,082
  8,486
  8,910
  9,356
  9,824
  10,315
Adjusted assets (=assets-cash), $m
  2,506
  2,631
  2,763
  2,901
  3,046
  3,198
  3,358
  3,526
  3,702
  3,888
  4,082
  4,286
  4,500
  4,725
  4,962
  5,210
  5,470
  5,744
  6,031
  6,332
  6,649
  6,981
  7,331
  7,697
  8,082
  8,486
  8,910
  9,356
  9,824
  10,315
Revenue / Adjusted assets
  0.463
  0.463
  0.463
  0.463
  0.463
  0.463
  0.463
  0.463
  0.463
  0.463
  0.463
  0.463
  0.463
  0.463
  0.463
  0.463
  0.463
  0.463
  0.463
  0.463
  0.463
  0.463
  0.463
  0.463
  0.463
  0.463
  0.463
  0.463
  0.463
  0.463
Average production assets, $m
  1,820
  1,911
  2,007
  2,107
  2,213
  2,323
  2,440
  2,562
  2,690
  2,824
  2,965
  3,114
  3,269
  3,433
  3,604
  3,785
  3,974
  4,172
  4,381
  4,600
  4,830
  5,072
  5,325
  5,592
  5,871
  6,165
  6,473
  6,797
  7,136
  7,493
Working capital, $m
  -57
  -60
  -63
  -66
  -69
  -73
  -76
  -80
  -84
  -88
  -93
  -97
  -102
  -107
  -113
  -118
  -124
  -130
  -137
  -144
  -151
  -158
  -166
  -175
  -183
  -193
  -202
  -212
  -223
  -234
Total debt, $m
  1,312
  1,425
  1,543
  1,667
  1,798
  1,935
  2,079
  2,230
  2,389
  2,555
  2,730
  2,914
  3,107
  3,309
  3,522
  3,745
  3,980
  4,226
  4,484
  4,756
  5,041
  5,340
  5,654
  5,984
  6,330
  6,694
  7,076
  7,477
  7,898
  8,340
Total liabilities, $m
  2,255
  2,368
  2,487
  2,611
  2,741
  2,878
  3,022
  3,173
  3,332
  3,499
  3,674
  3,857
  4,050
  4,253
  4,465
  4,689
  4,923
  5,169
  5,428
  5,699
  5,984
  6,283
  6,597
  6,927
  7,274
  7,637
  8,019
  8,420
  8,841
  9,283
Total equity, $m
  251
  263
  276
  290
  305
  320
  336
  353
  370
  389
  408
  429
  450
  473
  496
  521
  547
  574
  603
  633
  665
  698
  733
  770
  808
  849
  891
  936
  982
  1,031
Total liabilities and equity, $m
  2,506
  2,631
  2,763
  2,901
  3,046
  3,198
  3,358
  3,526
  3,702
  3,888
  4,082
  4,286
  4,500
  4,726
  4,961
  5,210
  5,470
  5,743
  6,031
  6,332
  6,649
  6,981
  7,330
  7,697
  8,082
  8,486
  8,910
  9,356
  9,823
  10,314
Debt-to-equity ratio
  5.230
  5.410
  5.580
  5.750
  5.900
  6.050
  6.190
  6.320
  6.450
  6.570
  6.690
  6.800
  6.900
  7.000
  7.100
  7.190
  7.280
  7.360
  7.440
  7.510
  7.580
  7.650
  7.710
  7.770
  7.830
  7.890
  7.940
  7.990
  8.040
  8.090
Adjusted equity ratio
  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
  0.100

CASH FLOW

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Net income, $m
  -51
  -30
  -34
  -37
  -40
  -44
  -47
  -51
  -54
  -58
  -62
  -66
  -70
  -75
  -79
  -84
  -89
  -94
  -99
  -104
  -109
  -115
  -121
  -126
  -133
  -139
  -145
  -152
  -159
  -166
Depreciation, amort., depletion, $m
  222
  233
  245
  257
  270
  284
  298
  313
  328
  345
  362
  380
  399
  419
  440
  462
  485
  509
  534
  561
  589
  618
  649
  682
  716
  752
  789
  829
  870
  914
Funds from operations, $m
  171
  203
  211
  220
  230
  240
  251
  262
  274
  286
  300
  314
  328
  344
  360
  378
  396
  415
  436
  457
  480
  504
  529
  555
  583
  613
  644
  677
  711
  747
Change in working capital, $m
  -3
  -3
  -3
  -3
  -3
  -3
  -4
  -4
  -4
  -4
  -4
  -5
  -5
  -5
  -5
  -6
  -6
  -6
  -7
  -7
  -7
  -8
  -8
  -8
  -9
  -9
  -10
  -10
  -11
  -11
Cash from operations, $m
  174
  206
  214
  223
  233
  243
  254
  266
  278
  290
  304
  318
  333
  349
  366
  383
  402
  422
  442
  464
  487
  511
  537
  564
  592
  622
  654
  687
  722
  758
Maintenance CAPEX, $m
  -211
  -222
  -233
  -245
  -257
  -270
  -283
  -298
  -312
  -328
  -344
  -362
  -380
  -399
  -419
  -440
  -462
  -485
  -509
  -534
  -561
  -589
  -618
  -649
  -682
  -716
  -752
  -789
  -829
  -870
New CAPEX, $m
  -86
  -91
  -96
  -100
  -105
  -111
  -116
  -122
  -128
  -134
  -141
  -148
  -156
  -163
  -172
  -180
  -189
  -199
  -209
  -219
  -230
  -242
  -254
  -266
  -280
  -294
  -308
  -324
  -340
  -357
Cash from investing activities, $m
  -297
  -313
  -329
  -345
  -362
  -381
  -399
  -420
  -440
  -462
  -485
  -510
  -536
  -562
  -591
  -620
  -651
  -684
  -718
  -753
  -791
  -831
  -872
  -915
  -962
  -1,010
  -1,060
  -1,113
  -1,169
  -1,227
Free cash flow, $m
  -123
  -107
  -114
  -122
  -129
  -137
  -145
  -154
  -163
  -172
  -182
  -192
  -202
  -213
  -225
  -236
  -249
  -262
  -275
  -289
  -304
  -319
  -335
  -352
  -369
  -388
  -407
  -426
  -447
  -469
Issuance/(repayment) of debt, $m
  -133
  113
  118
  124
  131
  137
  144
  151
  159
  167
  175
  184
  193
  203
  213
  223
  234
  246
  258
  271
  285
  299
  314
  330
  346
  364
  382
  401
  421
  442
Issuance/(repurchase) of shares, $m
  301
  43
  47
  51
  55
  59
  63
  68
  72
  77
  82
  87
  92
  97
  103
  109
  115
  121
  127
  134
  141
  148
  155
  163
  171
  179
  188
  197
  206
  216
Cash from financing (excl. dividends), $m  
  168
  156
  165
  175
  186
  196
  207
  219
  231
  244
  257
  271
  285
  300
  316
  332
  349
  367
  385
  405
  426
  447
  469
  493
  517
  543
  570
  598
  627
  658
Total cash flow (excl. dividends), $m
  45
  48
  51
  53
  56
  59
  62
  65
  68
  71
  75
  79
  82
  87
  91
  95
  100
  105
  111
  116
  122
  128
  134
  141
  148
  156
  163
  171
  180
  189
Retained Cash Flow (-), $m
  -301
  -43
  -47
  -51
  -55
  -59
  -63
  -68
  -72
  -77
  -82
  -87
  -92
  -97
  -103
  -109
  -115
  -121
  -127
  -134
  -141
  -148
  -155
  -163
  -171
  -179
  -188
  -197
  -206
  -216
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
  -256
  5
  4
  3
  1
  0
  -1
  -3
  -4
  -5
  -7
  -8
  -9
  -11
  -12
  -13
  -14
  -16
  -17
  -18
  -19
  -20
  -21
  -22
  -23
  -24
  -25
  -25
  -26
  -27
Discount rate, %
  14.50
  15.23
  15.99
  16.79
  17.62
  18.51
  19.43
  20.40
  21.42
  22.49
  23.62
  24.80
  26.04
  27.34
  28.71
  30.14
  31.65
  33.23
  34.90
  36.64
  38.47
  40.40
  42.42
  44.54
  46.76
  49.10
  51.56
  54.14
  56.84
  59.68
PV of cash for distribution, $m
  -224
  4
  3
  1
  1
  0
  0
  -1
  -1
  -1
  -1
  -1
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
Current shareholders' claim on cash, %
  50.0
  42.7
  36.2
  30.6
  25.8
  21.6
  18.0
  15.0
  12.5
  10.3
  8.5
  7.0
  5.8
  4.8
  3.9
  3.2
  2.6
  2.2
  1.8
  1.4
  1.2
  1.0
  0.8
  0.6
  0.5
  0.4
  0.4
  0.3
  0.2
  0.2

Foresight Energy LP is engaged in the mining and marketing of coal from reserves and operations located in the Illinois Basin. As of December 31, 2016, the Company controlled 2.1 billion tons of coal in the state of Illinois. Its reserves consist principally of three contiguous blocks of uniform, thick, high heat content (high Btu) thermal coal, which are used for longwall operations. The Company operates four underground mining complexes in the Illinois Basin, including Williamson, Sugar Camp, Hillsboro and Macoupin. Its mining complexes operate in the Illinois Basin with approximately two located in Southern Illinois and over two located in Central Illinois. Williamson, Sugar Camp and Hillsboro are longwall operations, and Macoupin is a continuous miner operation. The Company markets and sells its coal to electric utility and industrial companies in the eastern half of the United States as well as internationally (primarily into Europe).

FINANCIAL RATIOS  of  Foresight Energy LP (FELP)

Valuation Ratios
P/E Ratio -0.3
Price to Sales 0.1
Price to Book -0.3
Price to Tangible Book
Price to Cash Flow 0.2
Price to Free Cash Flow 0.3
Growth Rates
Sales Growth Rate -11.1%
Sales - 3 Yr. Growth Rate %
EPS Growth Rate %
EPS - 3 Yr. Growth Rate %
Capital Spending Gr. Rate -35.3%
Cap. Spend. - 3 Yr. Gr. Rate -23.6%
Financial Strength
Quick Ratio 0
Current Ratio 0.1
LT Debt to Equity -782.6%
Total Debt to Equity -1021.3%
Interest Coverage -1
Management Effectiveness
Return On Assets -5.6%
Ret/ On Assets - 3 Yr. Avg. 4%
Return On Total Capital -11.6%
Ret/ On T. Cap. - 3 Yr. Avg. -1.8%
Return On Equity 267.2%
Return On Equity - 3 Yr. Avg. 514.1%
Asset Turnover 0.5
Profitability Ratios
Gross Margin 34.1%
Gross Margin - 3 Yr. Avg. 33.7%
EBITDA Margin 7.5%
EBITDA Margin - 3 Yr. Avg. 24.2%
Operating Margin 1.1%
Oper. Margin - 3 Yr. Avg. 10.8%
Pre-Tax Margin -20.4%
Pre-Tax Margin - 3 Yr. Avg. -3.9%
Net Profit Margin -20.4%
Net Profit Margin - 3 Yr. Avg. -4%
Effective Tax Rate 0%
Eff/ Tax Rate - 3 Yr. Avg. 0%
Payout Ratio 0%

FELP stock valuation input parameters

Revenue. Company's revenue (or sales) is always the starting point of any cash flow forecast. In the FELP stock intrinsic value calculation we used $1105 million for the last fiscal year's total revenue generated by Foresight Energy LP. The default revenue input number comes from 0001 income statement of Foresight Energy LP. 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 FELP stock valuation model: a) initial revenue growth rate of 5% 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 14.5%, whose default value for FELP is calculated based on our internal credit rating of Foresight Energy LP, 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 Foresight Energy LP.
    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 FELP stock the variable cost ratio is equal to 83.4%.

Fixed operating expenses is just that - expenses that are not dependant on the volume of production. They are set to $101 million in the base year in the intrinsic value calculation for FELP 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 9.7% for Foresight Energy LP.

Corporate tax rate of 27% is the nominal tax rate for Foresight Energy LP. 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 FELP 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 FELP are equal to 156.9%.

Life of production assets of 8.2 years is the average useful life of capital assets used in Foresight Energy LP 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 FELP is equal to -4.9%. 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 - $0 million for Foresight Energy LP - 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 145.883 million for Foresight Energy LP 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 Foresight Energy LP at the current share price and the inputted number of shares is $0.1 billion.

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