Intrinsic value of FutureFuel - FF

Previous Close

$17.44

  Intrinsic Value

$5.86

stock screener

  Rating & Target

str. sell

-66%

Previous close

$17.44

 
Intrinsic value

$5.86

 
Up/down potential

-66%

 
Rating

str. sell

We calculate the intrinsic value of FF 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 0.8

 

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, %
  29.80
  27.32
  25.09
  23.08
  21.27
  19.64
  18.18
  16.86
  15.68
  14.61
  13.65
  12.78
  12.00
  11.30
  10.67
  10.11
  9.60
  9.14
  8.72
  8.35
  8.02
  7.71
  7.44
  7.20
  6.98
  6.78
  6.60
  6.44
  6.30
  6.17
Revenue, $m
  357
  455
  569
  700
  849
  1,015
  1,200
  1,402
  1,622
  1,859
  2,113
  2,383
  2,669
  2,970
  3,287
  3,620
  3,967
  4,329
  4,707
  5,100
  5,509
  5,934
  6,375
  6,834
  7,311
  7,807
  8,322
  8,858
  9,416
  9,997
Variable operating expenses, $m
  306
  390
  488
  600
  728
  871
  1,029
  1,203
  1,391
  1,594
  1,812
  2,043
  2,288
  2,547
  2,819
  3,104
  3,402
  3,712
  4,036
  4,373
  4,724
  5,088
  5,467
  5,860
  6,269
  6,694
  7,136
  7,596
  8,074
  8,572
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
  306
  390
  488
  600
  728
  871
  1,029
  1,203
  1,391
  1,594
  1,812
  2,043
  2,288
  2,547
  2,819
  3,104
  3,402
  3,712
  4,036
  4,373
  4,724
  5,088
  5,467
  5,860
  6,269
  6,694
  7,136
  7,596
  8,074
  8,572
Operating income, $m
  51
  65
  81
  100
  121
  145
  171
  200
  231
  265
  301
  340
  380
  423
  468
  516
  565
  617
  671
  727
  785
  846
  909
  974
  1,042
  1,113
  1,186
  1,262
  1,342
  1,425
EBITDA, $m
  66
  84
  105
  129
  157
  187
  222
  259
  299
  343
  390
  440
  493
  548
  607
  668
  732
  799
  869
  942
  1,017
  1,096
  1,177
  1,262
  1,350
  1,441
  1,537
  1,636
  1,739
  1,846
Interest expense (income), $m
  0
  0
  1
  3
  4
  6
  8
  11
  13
  16
  20
  23
  27
  31
  35
  39
  44
  49
  54
  59
  64
  70
  76
  82
  89
  95
  102
  109
  117
  125
  133
Earnings before tax, $m
  51
  63
  78
  95
  115
  136
  160
  186
  215
  245
  278
  313
  350
  389
  429
  472
  517
  563
  612
  662
  715
  770
  826
  885
  947
  1,010
  1,077
  1,146
  1,217
  1,292
Tax expense, $m
  14
  17
  21
  26
  31
  37
  43
  50
  58
  66
  75
  84
  94
  105
  116
  127
  140
  152
  165
  179
  193
  208
  223
  239
  256
  273
  291
  309
  329
  349
Net income, $m
  37
  46
  57
  70
  84
  99
  117
  136
  157
  179
  203
  228
  255
  284
  313
  345
  377
  411
  447
  484
  522
  562
  603
  646
  691
  738
  786
  836
  889
  943

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
  293
  373
  466
  574
  696
  833
  984
  1,150
  1,331
  1,525
  1,733
  1,955
  2,189
  2,437
  2,697
  2,969
  3,254
  3,552
  3,861
  4,184
  4,519
  4,868
  5,230
  5,606
  5,998
  6,404
  6,827
  7,267
  7,725
  8,201
Adjusted assets (=assets-cash), $m
  293
  373
  466
  574
  696
  833
  984
  1,150
  1,331
  1,525
  1,733
  1,955
  2,189
  2,437
  2,697
  2,969
  3,254
  3,552
  3,861
  4,184
  4,519
  4,868
  5,230
  5,606
  5,998
  6,404
  6,827
  7,267
  7,725
  8,201
Revenue / Adjusted assets
  1.218
  1.220
  1.221
  1.220
  1.220
  1.218
  1.220
  1.219
  1.219
  1.219
  1.219
  1.219
  1.219
  1.219
  1.219
  1.219
  1.219
  1.219
  1.219
  1.219
  1.219
  1.219
  1.219
  1.219
  1.219
  1.219
  1.219
  1.219
  1.219
  1.219
Average production assets, $m
  149
  190
  237
  292
  354
  423
  500
  585
  676
  775
  881
  994
  1,113
  1,239
  1,371
  1,509
  1,654
  1,805
  1,963
  2,127
  2,297
  2,474
  2,659
  2,850
  3,049
  3,255
  3,470
  3,694
  3,927
  4,169
Working capital, $m
  52
  66
  82
  101
  123
  147
  174
  203
  235
  270
  306
  345
  387
  431
  477
  525
  575
  628
  683
  740
  799
  860
  924
  991
  1,060
  1,132
  1,207
  1,284
  1,365
  1,450
Total debt, $m
  22
  48
  79
  114
  154
  199
  249
  303
  362
  426
  494
  567
  644
  725
  811
  900
  993
  1,091
  1,193
  1,298
  1,408
  1,523
  1,641
  1,765
  1,893
  2,027
  2,165
  2,310
  2,460
  2,616
Total liabilities, $m
  96
  122
  153
  188
  228
  273
  323
  377
  436
  500
  568
  641
  718
  799
  885
  974
  1,067
  1,165
  1,267
  1,372
  1,482
  1,597
  1,715
  1,839
  1,967
  2,101
  2,239
  2,384
  2,534
  2,690
Total equity, $m
  197
  251
  313
  386
  468
  560
  661
  773
  894
  1,025
  1,165
  1,314
  1,471
  1,637
  1,812
  1,995
  2,187
  2,387
  2,595
  2,812
  3,037
  3,271
  3,515
  3,768
  4,030
  4,304
  4,588
  4,883
  5,191
  5,511
Total liabilities and equity, $m
  293
  373
  466
  574
  696
  833
  984
  1,150
  1,330
  1,525
  1,733
  1,955
  2,189
  2,436
  2,697
  2,969
  3,254
  3,552
  3,862
  4,184
  4,519
  4,868
  5,230
  5,607
  5,997
  6,405
  6,827
  7,267
  7,725
  8,201
Debt-to-equity ratio
  0.110
  0.190
  0.250
  0.300
  0.330
  0.360
  0.380
  0.390
  0.410
  0.420
  0.420
  0.430
  0.440
  0.440
  0.450
  0.450
  0.450
  0.460
  0.460
  0.460
  0.460
  0.470
  0.470
  0.470
  0.470
  0.470
  0.470
  0.470
  0.470
  0.470
Adjusted equity ratio
  0.672
  0.672
  0.672
  0.672
  0.672
  0.672
  0.672
  0.672
  0.672
  0.672
  0.672
  0.672
  0.672
  0.672
  0.672
  0.672
  0.672
  0.672
  0.672
  0.672
  0.672
  0.672
  0.672
  0.672
  0.672
  0.672
  0.672
  0.672
  0.672
  0.672

CASH FLOW

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Net income, $m
  37
  46
  57
  70
  84
  99
  117
  136
  157
  179
  203
  228
  255
  284
  313
  345
  377
  411
  447
  484
  522
  562
  603
  646
  691
  738
  786
  836
  889
  943
Depreciation, amort., depletion, $m
  15
  19
  24
  30
  36
  43
  51
  59
  68
  78
  89
  100
  112
  125
  138
  152
  167
  182
  198
  215
  232
  250
  269
  288
  308
  329
  351
  373
  397
  421
Funds from operations, $m
  52
  66
  81
  99
  120
  142
  168
  195
  225
  257
  292
  329
  368
  409
  452
  497
  544
  594
  645
  698
  754
  812
  872
  934
  999
  1,066
  1,136
  1,209
  1,285
  1,364
Change in working capital, $m
  12
  14
  17
  19
  22
  24
  27
  29
  32
  34
  37
  39
  41
  44
  46
  48
  50
  53
  55
  57
  59
  62
  64
  67
  69
  72
  75
  78
  81
  84
Cash from operations, $m
  40
  51
  65
  80
  98
  118
  141
  166
  193
  223
  255
  290
  326
  365
  406
  449
  494
  541
  590
  641
  695
  750
  808
  868
  930
  995
  1,062
  1,132
  1,204
  1,280
Maintenance CAPEX, $m
  -12
  -15
  -19
  -24
  -29
  -36
  -43
  -51
  -59
  -68
  -78
  -89
  -100
  -112
  -125
  -138
  -152
  -167
  -182
  -198
  -215
  -232
  -250
  -269
  -288
  -308
  -329
  -351
  -373
  -397
New CAPEX, $m
  -34
  -41
  -48
  -55
  -62
  -70
  -77
  -84
  -92
  -99
  -106
  -113
  -119
  -126
  -132
  -139
  -145
  -151
  -157
  -164
  -170
  -177
  -184
  -191
  -199
  -207
  -215
  -224
  -233
  -242
Cash from investing activities, $m
  -46
  -56
  -67
  -79
  -91
  -106
  -120
  -135
  -151
  -167
  -184
  -202
  -219
  -238
  -257
  -277
  -297
  -318
  -339
  -362
  -385
  -409
  -434
  -460
  -487
  -515
  -544
  -575
  -606
  -639
Free cash flow, $m
  -5
  -4
  -2
  2
  6
  13
  21
  31
  43
  56
  71
  88
  107
  127
  149
  172
  197
  223
  250
  279
  309
  341
  374
  408
  443
  480
  518
  557
  599
  641
Issuance/(repayment) of debt, $m
  22
  26
  31
  35
  40
  45
  50
  54
  59
  64
  68
  73
  77
  81
  85
  89
  93
  98
  102
  106
  110
  114
  119
  123
  128
  133
  139
  144
  150
  156
Issuance/(repurchase) of shares, $m
  8
  7
  6
  3
  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  
  30
  33
  37
  38
  40
  45
  50
  54
  59
  64
  68
  73
  77
  81
  85
  89
  93
  98
  102
  106
  110
  114
  119
  123
  128
  133
  139
  144
  150
  156
Total cash flow (excl. dividends), $m
  25
  29
  34
  40
  46
  58
  71
  85
  102
  120
  139
  161
  184
  208
  234
  261
  290
  320
  352
  385
  419
  455
  492
  531
  571
  613
  657
  702
  749
  797
Retained Cash Flow (-), $m
  -45
  -54
  -63
  -72
  -82
  -92
  -102
  -112
  -121
  -131
  -140
  -149
  -158
  -166
  -175
  -183
  -191
  -200
  -208
  -217
  -225
  -234
  -243
  -253
  -263
  -273
  -284
  -296
  -308
  -320
Prev. year cash balance distribution, $m
  200
  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
  -24
  -28
  -33
  -36
  -34
  -31
  -26
  -19
  -11
  0
  12
  26
  42
  59
  78
  99
  121
  144
  168
  194
  221
  249
  278
  309
  340
  372
  406
  441
  477
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
  172
  -22
  -25
  -27
  -28
  -25
  -21
  -16
  -11
  -6
  0
  5
  10
  14
  17
  20
  21
  22
  22
  21
  20
  18
  16
  14
  12
  10
  8
  6
  5
  4
Current shareholders' claim on cash, %
  97.6
  95.9
  94.9
  94.5
  94.5
  94.5
  94.5
  94.5
  94.5
  94.5
  94.5
  94.5
  94.5
  94.5
  94.5
  94.5
  94.5
  94.5
  94.5
  94.5
  94.5
  94.5
  94.5
  94.5
  94.5
  94.5
  94.5
  94.5
  94.5
  94.5

FutureFuel Corp. is the holding company of FutureFuel Chemical Company. FutureFuel Chemical Company manufactures diversified chemical products, bio-based products consisting of biofuels, and bio-based specialty chemical products. FutureFuel Chemical Company conducts its operations through two segments: chemicals and biofuels. The chemicals segment manufactures a diversified listing of chemical products that are sold to third-party customers. The biofuels segment primarily produces and sells biodiesel and petrodiesel blends to its customers. The biofuels segment also involves the buying, selling and shipping of refined petroleum products on common carrier pipelines. Custom chemicals manufacturing involves producing various products for strategic customers, generally under long-term contracts. Its products also include a family of acetal-based solvents, including diethoxymethane, dimethoxymethane, dibutoxymethane, glycerol formal and phenol sulfonic acid.

FINANCIAL RATIOS  of  FutureFuel (FF)

Valuation Ratios
P/E Ratio 13.6
Price to Sales 3
Price to Book 2.3
Price to Tangible Book
Price to Cash Flow 8.4
Price to Free Cash Flow 8.9
Growth Rates
Sales Growth Rate -15.7%
Sales - 3 Yr. Growth Rate %
EPS Growth Rate %
EPS - 3 Yr. Growth Rate %
Capital Spending Gr. Rate -28.6%
Cap. Spend. - 3 Yr. Gr. Rate -23.4%
Financial Strength
Quick Ratio NaN
Current Ratio 0
LT Debt to Equity 0%
Total Debt to Equity 0%
Interest Coverage 0
Management Effectiveness
Return On Assets 11%
Ret/ On Assets - 3 Yr. Avg. 10.9%
Return On Total Capital 15.4%
Ret/ On T. Cap. - 3 Yr. Avg. 14.3%
Return On Equity 15.4%
Return On Equity - 3 Yr. Avg. 14.3%
Asset Turnover 0.5
Profitability Ratios
Gross Margin 18.6%
Gross Margin - 3 Yr. Avg. 19%
EBITDA Margin 20.6%
EBITDA Margin - 3 Yr. Avg. 21.1%
Operating Margin 14.2%
Oper. Margin - 3 Yr. Avg. 15.4%
Pre-Tax Margin 16.2%
Pre-Tax Margin - 3 Yr. Avg. 17.7%
Net Profit Margin 22.1%
Net Profit Margin - 3 Yr. Avg. 17.7%
Effective Tax Rate -36.6%
Eff/ Tax Rate - 3 Yr. Avg. -1.4%
Payout Ratio 17.9%

FF stock valuation input parameters

Revenue. Company's revenue (or sales) is always the starting point of any cash flow forecast. In the FF stock intrinsic value calculation we used $275.026 million for the last fiscal year's total revenue generated by FutureFuel. The default revenue input number comes from 0001 income statement of FutureFuel. 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 FF stock valuation model: a) initial revenue growth rate of 29.8% 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 FF is calculated based on our internal credit rating of FutureFuel, 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 FutureFuel.
    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 FF stock the variable cost ratio is equal to 85.8%.

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 FF 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 5.4% for FutureFuel.

Corporate tax rate of 27% is the nominal tax rate for FutureFuel. 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 FF 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 FF are equal to 41.7%.

Life of production assets of 9.9 years is the average useful life of capital assets used in FutureFuel 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 FF is equal to 14.5%. 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 - $351.596 million for FutureFuel - 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 43.743 million for FutureFuel 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 FutureFuel at the current share price and the inputted number of shares is $0.8 billion.

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COMPANY NEWS

▶ FutureFuel: 2Q Earnings Snapshot   [Aug-09-18 07:03PM  Associated Press]
▶ FutureFuel: 1Q Earnings Snapshot   [May-10-18 04:12PM  Associated Press]
▶ FutureFuel posts 4Q profit   [Mar-16-18 04:21PM  Associated Press]
▶ FutureFuel Releases 2017 Results   [04:02PM  GlobeNewswire]
▶ FutureFuel posts 3Q profit   [Nov-09-17 05:49PM  Associated Press]
▶ ETFs with exposure to FutureFuel Corp. : October 23, 2017   [Oct-23-17 10:37AM  Capital Cube]
▶ ETFs with exposure to FutureFuel Corp. : October 10, 2017   [Oct-10-17 11:25AM  Capital Cube]
▶ All You Need To Know About FutureFuel Corps (FF) Risks   [Sep-20-17 02:15PM  Simply Wall St.]
▶ FutureFuel posts 2Q profit   [Aug-09-17 10:10PM  Associated Press]
▶ ETFs with exposure to FutureFuel Corp. : July 12, 2017   [Jul-12-17 02:31PM  Capital Cube]
▶ ETFs with exposure to FutureFuel Corp. : June 19, 2017   [Jun-19-17 03:20PM  Capital Cube]
▶ FutureFuel Corp. Value Analysis (NYSE:FF) : May 19, 2017   [May-19-17 02:26PM  Capital Cube]
▶ FutureFuel posts 1Q profit   [May-09-17 05:24PM  Associated Press]
▶ ETFs with exposure to FutureFuel Corp. : April 25, 2017   [Apr-25-17 03:33PM  Capital Cube]
▶ FutureFuel posts 4Q profit   [Mar-16-17 04:16PM  Associated Press]
▶ FutureFuel Releases 2016 Results   [04:01PM  GlobeNewswire]
▶ Is FutureFuel Corp. (FF) Worthy of Your Portfolio?   [Dec-10-16 03:36PM  at Insider Monkey]

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