Intrinsic value of Forum Energy Technologies, Inc. - FET

Previous Close

$3.01

  Intrinsic Value

$0.46

stock screener

  Rating & Target

str. sell

-85%

Previous close

$3.01

 
Intrinsic value

$0.46

 
Up/down potential

-85%

 
Rating

str. sell

We calculate the intrinsic value of FET 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 0.3

 

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, %
  10.20
  9.68
  9.21
  8.79
  8.41
  8.07
  7.76
  7.49
  7.24
  7.01
  6.81
  6.63
  6.47
  6.32
  6.19
  6.07
  5.96
  5.87
  5.78
  5.70
  5.63
  5.57
  5.51
  5.46
  5.41
  5.37
  5.34
  5.30
  5.27
  5.24
Revenue, $m
  1,173
  1,286
  1,404
  1,528
  1,656
  1,790
  1,929
  2,074
  2,224
  2,380
  2,542
  2,710
  2,886
  3,068
  3,258
  3,456
  3,662
  3,877
  4,101
  4,335
  4,579
  4,834
  5,100
  5,379
  5,670
  5,975
  6,294
  6,627
  6,977
  7,343
Variable operating expenses, $m
  1,368
  1,492
  1,622
  1,758
  1,899
  2,045
  2,197
  2,356
  2,520
  2,691
  2,786
  2,971
  3,163
  3,363
  3,571
  3,788
  4,014
  4,249
  4,495
  4,751
  5,019
  5,298
  5,590
  5,896
  6,215
  6,549
  6,898
  7,264
  7,647
  8,048
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
  1,368
  1,492
  1,622
  1,758
  1,899
  2,045
  2,197
  2,356
  2,520
  2,691
  2,786
  2,971
  3,163
  3,363
  3,571
  3,788
  4,014
  4,249
  4,495
  4,751
  5,019
  5,298
  5,590
  5,896
  6,215
  6,549
  6,898
  7,264
  7,647
  8,048
Operating income, $m
  -196
  -206
  -218
  -230
  -242
  -255
  -268
  -282
  -297
  -312
  -244
  -260
  -277
  -295
  -313
  -332
  -352
  -373
  -394
  -417
  -440
  -464
  -490
  -517
  -545
  -574
  -605
  -637
  -670
  -706
EBITDA, $m
  -65
  -71
  -78
  -85
  -92
  -100
  -107
  -115
  -124
  -132
  -141
  -151
  -160
  -171
  -181
  -192
  -204
  -216
  -228
  -241
  -255
  -269
  -284
  -299
  -315
  -332
  -350
  -368
  -388
  -408
Interest expense (income), $m
  26
  33
  38
  43
  49
  55
  61
  67
  74
  80
  87
  95
  103
  111
  119
  127
  136
  146
  156
  166
  176
  187
  199
  211
  224
  237
  251
  265
  280
  296
  312
Earnings before tax, $m
  -228
  -244
  -261
  -278
  -297
  -316
  -335
  -356
  -377
  -399
  -339
  -363
  -388
  -414
  -440
  -468
  -498
  -528
  -560
  -593
  -627
  -663
  -701
  -740
  -782
  -825
  -870
  -917
  -966
  -1,018
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
  -228
  -244
  -261
  -278
  -297
  -316
  -335
  -356
  -377
  -399
  -339
  -363
  -388
  -414
  -440
  -468
  -498
  -528
  -560
  -593
  -627
  -663
  -701
  -740
  -782
  -825
  -870
  -917
  -966
  -1,018

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
  2,015
  2,210
  2,413
  2,625
  2,846
  3,076
  3,315
  3,563
  3,821
  4,089
  4,367
  4,657
  4,958
  5,272
  5,598
  5,938
  6,292
  6,661
  7,046
  7,448
  7,867
  8,306
  8,763
  9,242
  9,742
  10,266
  10,814
  11,387
  11,987
  12,616
Adjusted assets (=assets-cash), $m
  2,015
  2,210
  2,413
  2,625
  2,846
  3,076
  3,315
  3,563
  3,821
  4,089
  4,367
  4,657
  4,958
  5,272
  5,598
  5,938
  6,292
  6,661
  7,046
  7,448
  7,867
  8,306
  8,763
  9,242
  9,742
  10,266
  10,814
  11,387
  11,987
  12,616
Revenue / Adjusted assets
  0.582
  0.582
  0.582
  0.582
  0.582
  0.582
  0.582
  0.582
  0.582
  0.582
  0.582
  0.582
  0.582
  0.582
  0.582
  0.582
  0.582
  0.582
  0.582
  0.582
  0.582
  0.582
  0.582
  0.582
  0.582
  0.582
  0.582
  0.582
  0.582
  0.582
Average production assets, $m
  764
  838
  916
  996
  1,080
  1,167
  1,258
  1,352
  1,450
  1,552
  1,657
  1,767
  1,881
  2,000
  2,124
  2,253
  2,388
  2,528
  2,674
  2,826
  2,985
  3,152
  3,325
  3,507
  3,697
  3,896
  4,103
  4,321
  4,549
  4,787
Working capital, $m
  532
  584
  638
  694
  752
  813
  876
  941
  1,010
  1,080
  1,154
  1,231
  1,310
  1,393
  1,479
  1,569
  1,663
  1,760
  1,862
  1,968
  2,079
  2,195
  2,316
  2,442
  2,574
  2,713
  2,857
  3,009
  3,167
  3,334
Total debt, $m
  600
  685
  774
  866
  963
  1,063
  1,168
  1,276
  1,389
  1,506
  1,628
  1,754
  1,886
  2,023
  2,166
  2,314
  2,469
  2,630
  2,798
  2,974
  3,157
  3,349
  3,549
  3,758
  3,977
  4,205
  4,445
  4,695
  4,958
  5,232
Total liabilities, $m
  880
  966
  1,055
  1,147
  1,244
  1,344
  1,449
  1,557
  1,670
  1,787
  1,909
  2,035
  2,167
  2,304
  2,446
  2,595
  2,750
  2,911
  3,079
  3,255
  3,438
  3,630
  3,830
  4,039
  4,257
  4,486
  4,726
  4,976
  5,238
  5,513
Total equity, $m
  1,134
  1,244
  1,359
  1,478
  1,602
  1,732
  1,866
  2,006
  2,151
  2,302
  2,459
  2,622
  2,791
  2,968
  3,152
  3,343
  3,542
  3,750
  3,967
  4,193
  4,429
  4,676
  4,934
  5,203
  5,485
  5,780
  6,088
  6,411
  6,749
  7,103
Total liabilities and equity, $m
  2,014
  2,210
  2,414
  2,625
  2,846
  3,076
  3,315
  3,563
  3,821
  4,089
  4,368
  4,657
  4,958
  5,272
  5,598
  5,938
  6,292
  6,661
  7,046
  7,448
  7,867
  8,306
  8,764
  9,242
  9,742
  10,266
  10,814
  11,387
  11,987
  12,616
Debt-to-equity ratio
  0.530
  0.550
  0.570
  0.590
  0.600
  0.610
  0.630
  0.640
  0.650
  0.650
  0.660
  0.670
  0.680
  0.680
  0.690
  0.690
  0.700
  0.700
  0.710
  0.710
  0.710
  0.720
  0.720
  0.720
  0.730
  0.730
  0.730
  0.730
  0.730
  0.740
Adjusted equity ratio
  0.563
  0.563
  0.563
  0.563
  0.563
  0.563
  0.563
  0.563
  0.563
  0.563
  0.563
  0.563
  0.563
  0.563
  0.563
  0.563
  0.563
  0.563
  0.563
  0.563
  0.563
  0.563
  0.563
  0.563
  0.563
  0.563
  0.563
  0.563
  0.563
  0.563

CASH FLOW

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Net income, $m
  -228
  -244
  -261
  -278
  -297
  -316
  -335
  -356
  -377
  -399
  -339
  -363
  -388
  -414
  -440
  -468
  -498
  -528
  -560
  -593
  -627
  -663
  -701
  -740
  -782
  -825
  -870
  -917
  -966
  -1,018
Depreciation, amort., depletion, $m
  130
  135
  140
  145
  150
  155
  161
  167
  173
  179
  103
  110
  117
  124
  132
  140
  148
  157
  166
  176
  185
  196
  207
  218
  230
  242
  255
  268
  283
  297
Funds from operations, $m
  -98
  -109
  -121
  -134
  -147
  -160
  -174
  -189
  -204
  -220
  -236
  -253
  -271
  -289
  -309
  -329
  -349
  -371
  -394
  -417
  -442
  -468
  -494
  -523
  -552
  -583
  -615
  -648
  -684
  -721
Change in working capital, $m
  49
  52
  54
  56
  58
  61
  63
  66
  68
  71
  74
  77
  80
  83
  86
  90
  94
  98
  102
  106
  111
  116
  121
  126
  132
  138
  145
  152
  159
  166
Cash from operations, $m
  -147
  -161
  -175
  -190
  -205
  -221
  -237
  -254
  -272
  -291
  -310
  -330
  -351
  -372
  -395
  -418
  -443
  -469
  -495
  -523
  -553
  -583
  -615
  -649
  -684
  -721
  -760
  -800
  -842
  -887
Maintenance CAPEX, $m
  -43
  -47
  -52
  -57
  -62
  -67
  -72
  -78
  -84
  -90
  -96
  -103
  -110
  -117
  -124
  -132
  -140
  -148
  -157
  -166
  -176
  -185
  -196
  -207
  -218
  -230
  -242
  -255
  -268
  -283
New CAPEX, $m
  -70
  -74
  -77
  -81
  -84
  -87
  -91
  -94
  -98
  -102
  -106
  -110
  -114
  -119
  -124
  -129
  -134
  -140
  -146
  -152
  -159
  -166
  -174
  -182
  -190
  -199
  -208
  -218
  -228
  -239
Cash from investing activities, $m
  -113
  -121
  -129
  -138
  -146
  -154
  -163
  -172
  -182
  -192
  -202
  -213
  -224
  -236
  -248
  -261
  -274
  -288
  -303
  -318
  -335
  -351
  -370
  -389
  -408
  -429
  -450
  -473
  -496
  -522
Free cash flow, $m
  -261
  -282
  -304
  -327
  -351
  -375
  -400
  -427
  -454
  -482
  -512
  -543
  -575
  -608
  -643
  -679
  -717
  -757
  -799
  -842
  -887
  -935
  -985
  -1,037
  -1,092
  -1,149
  -1,209
  -1,272
  -1,338
  -1,408
Issuance/(repayment) of debt, $m
  81
  85
  89
  93
  97
  100
  104
  108
  113
  117
  122
  127
  132
  137
  143
  149
  155
  161
  168
  176
  183
  191
  200
  209
  219
  229
  239
  251
  262
  275
Issuance/(repurchase) of shares, $m
  332
  354
  376
  398
  421
  445
  470
  495
  522
  550
  496
  526
  557
  590
  624
  660
  697
  736
  777
  819
  863
  910
  959
  1,010
  1,063
  1,119
  1,178
  1,240
  1,304
  1,372
Cash from financing (excl. dividends), $m  
  413
  439
  465
  491
  518
  545
  574
  603
  635
  667
  618
  653
  689
  727
  767
  809
  852
  897
  945
  995
  1,046
  1,101
  1,159
  1,219
  1,282
  1,348
  1,417
  1,491
  1,566
  1,647
Total cash flow (excl. dividends), $m
  153
  157
  160
  163
  167
  170
  174
  177
  181
  185
  106
  110
  114
  119
  124
  129
  135
  140
  146
  153
  159
  166
  174
  182
  190
  199
  208
  218
  228
  239
Retained Cash Flow (-), $m
  -332
  -354
  -376
  -398
  -421
  -445
  -470
  -495
  -522
  -550
  -496
  -526
  -557
  -590
  -624
  -660
  -697
  -736
  -777
  -819
  -863
  -910
  -959
  -1,010
  -1,063
  -1,119
  -1,178
  -1,240
  -1,304
  -1,372
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
  -180
  -197
  -215
  -234
  -254
  -275
  -296
  -318
  -341
  -365
  -390
  -416
  -443
  -471
  -500
  -531
  -562
  -596
  -630
  -666
  -704
  -744
  -785
  -828
  -873
  -920
  -970
  -1,022
  -1,076
  -1,133
Discount rate, %
  7.70
  8.09
  8.49
  8.91
  9.36
  9.83
  10.32
  10.83
  11.38
  11.95
  12.54
  13.17
  13.83
  14.52
  15.25
  16.01
  16.81
  17.65
  18.53
  19.46
  20.43
  21.45
  22.52
  23.65
  24.83
  26.07
  27.38
  28.75
  30.18
  31.69
PV of cash for distribution, $m
  -167
  -169
  -169
  -167
  -163
  -157
  -149
  -140
  -129
  -118
  -106
  -94
  -82
  -71
  -60
  -49
  -40
  -32
  -25
  -19
  -14
  -10
  -7
  -5
  -3
  -2
  -1
  -1
  -1
  0
Current shareholders' claim on cash, %
  68.4
  47.3
  33.1
  23.3
  16.6
  11.9
  8.6
  6.2
  4.5
  3.3
  2.5
  1.9
  1.5
  1.1
  0.9
  0.7
  0.5
  0.4
  0.3
  0.2
  0.2
  0.1
  0.1
  0.1
  0.1
  0.1
  0.0
  0.0
  0.0
  0.0

Forum Energy Technologies, Inc. is an oilfield products company. The Company designs, manufactures and distributes products, and engages in aftermarket services, parts supply and related services. The Company operates through three segments: Drilling & Subsea, Completions, and Production & Infrastructure. The Drilling & Subsea segment designs and manufactures products, and provides related services to the drilling and subsea construction markets. The Completions segment designs, manufactures and supplies products, and provide related services to the well construction, completion, stimulation and intervention markets. The Production & Infrastructure segment designs, manufactures and supplies products, and provides related equipment and services to production and infrastructure markets. Its product offering includes a mix of engineered capital products and replaced items that are used in the exploration, development, production and transportation of oil and natural gas.

FINANCIAL RATIOS  of  Forum Energy Technologies, Inc. (FET)

Valuation Ratios
P/E Ratio -3.5
Price to Sales 0.5
Price to Book 0.2
Price to Tangible Book
Price to Cash Flow 4.4
Price to Free Cash Flow 6
Growth Rates
Sales Growth Rate -45.3%
Sales - 3 Yr. Growth Rate %
EPS Growth Rate %
EPS - 3 Yr. Growth Rate %
Capital Spending Gr. Rate -46.9%
Cap. Spend. - 3 Yr. Gr. Rate -22.3%
Financial Strength
Quick Ratio NaN
Current Ratio 0.1
LT Debt to Equity 32.1%
Total Debt to Equity 32.1%
Interest Coverage -4
Management Effectiveness
Return On Assets -3.6%
Ret/ On Assets - 3 Yr. Avg. 0.2%
Return On Total Capital -5%
Ret/ On T. Cap. - 3 Yr. Avg. -0.8%
Return On Equity -6.6%
Return On Equity - 3 Yr. Avg. -0.9%
Asset Turnover 0.3
Profitability Ratios
Gross Margin 17%
Gross Margin - 3 Yr. Avg. 24.5%
EBITDA Margin -8.5%
EBITDA Margin - 3 Yr. Avg. 2.3%
Operating Margin -21.9%
Oper. Margin - 3 Yr. Avg. -5.7%
Pre-Tax Margin -23.5%
Pre-Tax Margin - 3 Yr. Avg. -7.3%
Net Profit Margin -13.9%
Net Profit Margin - 3 Yr. Avg. -5%
Effective Tax Rate 40.6%
Eff/ Tax Rate - 3 Yr. Avg. 26.7%
Payout Ratio 0%

FET stock valuation input parameters

Revenue. Company's revenue (or sales) is always the starting point of any cash flow forecast. In the FET stock intrinsic value calculation we used $1064 million for the last fiscal year's total revenue generated by Forum Energy Technologies, Inc.. The default revenue input number comes from 0001 income statement of Forum Energy Technologies, 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 FET stock valuation model: a) initial revenue growth rate of 10.2% 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 7.7%, whose default value for FET is calculated based on our internal credit rating of Forum Energy Technologies, 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 Forum Energy Technologies, 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 FET stock the variable cost ratio is equal to 117.4%.

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 FET 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 6.3% for Forum Energy Technologies, Inc..

Corporate tax rate of 27% is the nominal tax rate for Forum Energy Technologies, 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 FET 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 FET are equal to 65.2%.

Life of production assets of 16.1 years is the average useful life of capital assets used in Forum Energy Technologies, 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 FET is equal to 45.4%. 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 - $1030.126 million for Forum Energy Technologies, 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 109.896 million for Forum Energy Technologies, 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 Forum Energy Technologies, Inc. at the current share price and the inputted number of shares is $0.3 billion.

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