Intrinsic value of FutureFuel - FF

Previous Close

$13.48

  Intrinsic Value

$11.21

stock screener

  Rating & Target

hold

-17%

Previous close

$13.48

 
Intrinsic value

$11.21

 
Up/down potential

-17%

 
Rating

hold

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 2017), $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
   2018
   2019
   2020
   2021
   2022
   2023
   2024
   2025
   2026
   2027
   2028
   2029
   2030
   2031
   2032
   2033
   2034
   2035
   2036
   2037
   2038
   2039
   2040
   2041
   2042
   2043
   2044
   2045
   2046
   2047

INCOME STATEMENT

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Revenue growth rate, %
  8.60
  8.24
  7.92
  7.62
  7.36
  7.13
  6.91
  6.72
  6.55
  6.39
  6.26
  6.13
  6.02
  5.92
  5.82
  5.74
  5.67
  5.60
  5.54
  5.49
  5.44
  5.39
  5.35
  5.32
  5.29
  5.26
  5.23
  5.21
  5.19
  5.17
Revenue, $m
  299
  323
  349
  375
  403
  432
  462
  493
  525
  559
  593
  630
  668
  707
  748
  791
  836
  883
  932
  983
  1,037
  1,093
  1,151
  1,212
  1,276
  1,343
  1,414
  1,487
  1,565
  1,645
Variable operating expenses, $m
  256
  277
  299
  322
  346
  370
  396
  423
  450
  479
  509
  540
  573
  607
  642
  679
  717
  757
  799
  843
  889
  937
  987
  1,040
  1,095
  1,152
  1,212
  1,276
  1,342
  1,411
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
  256
  277
  299
  322
  346
  370
  396
  423
  450
  479
  509
  540
  573
  607
  642
  679
  717
  757
  799
  843
  889
  937
  987
  1,040
  1,095
  1,152
  1,212
  1,276
  1,342
  1,411
Operating income, $m
  42
  46
  50
  53
  57
  61
  66
  70
  75
  79
  84
  90
  95
  101
  107
  113
  119
  126
  133
  140
  148
  156
  164
  173
  182
  191
  201
  212
  223
  234
EBITDA, $m
  55
  60
  64
  69
  74
  80
  85
  91
  97
  103
  109
  116
  123
  130
  138
  146
  154
  163
  172
  181
  191
  201
  212
  223
  235
  248
  261
  274
  288
  303
Interest expense (income), $m
  0
  0
  0
  1
  1
  1
  2
  2
  3
  3
  4
  4
  5
  5
  6
  6
  7
  8
  8
  9
  10
  10
  11
  12
  13
  14
  15
  16
  17
  18
  19
Earnings before tax, $m
  42
  46
  49
  52
  56
  59
  63
  67
  71
  76
  80
  85
  90
  95
  100
  106
  112
  118
  124
  130
  137
  144
  152
  160
  168
  177
  186
  195
  205
  216
Tax expense, $m
  11
  12
  13
  14
  15
  16
  17
  18
  19
  20
  22
  23
  24
  26
  27
  29
  30
  32
  33
  35
  37
  39
  41
  43
  45
  48
  50
  53
  55
  58
Net income, $m
  31
  33
  36
  38
  41
  43
  46
  49
  52
  55
  59
  62
  66
  69
  73
  77
  81
  86
  90
  95
  100
  105
  111
  117
  123
  129
  136
  142
  150
  157

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
  245
  265
  286
  308
  330
  354
  378
  404
  430
  458
  486
  516
  547
  580
  613
  649
  685
  724
  764
  806
  850
  896
  943
  994
  1,046
  1,101
  1,159
  1,219
  1,282
  1,349
Adjusted assets (=assets-cash), $m
  245
  265
  286
  308
  330
  354
  378
  404
  430
  458
  486
  516
  547
  580
  613
  649
  685
  724
  764
  806
  850
  896
  943
  994
  1,046
  1,101
  1,159
  1,219
  1,282
  1,349
Revenue / Adjusted assets
  1.220
  1.219
  1.220
  1.218
  1.221
  1.220
  1.222
  1.220
  1.221
  1.221
  1.220
  1.221
  1.221
  1.219
  1.220
  1.219
  1.220
  1.220
  1.220
  1.220
  1.220
  1.220
  1.221
  1.219
  1.220
  1.220
  1.220
  1.220
  1.221
  1.219
Average production assets, $m
  125
  135
  146
  157
  169
  181
  193
  206
  220
  234
  249
  264
  280
  296
  314
  332
  350
  370
  391
  412
  434
  458
  482
  508
  535
  563
  592
  623
  656
  689
Working capital, $m
  26
  28
  31
  33
  35
  38
  41
  43
  46
  49
  52
  55
  59
  62
  66
  70
  74
  78
  82
  87
  91
  96
  101
  107
  112
  118
  124
  131
  138
  145
Total debt, $m
  7
  13
  20
  27
  35
  43
  51
  59
  68
  77
  86
  96
  106
  117
  128
  139
  151
  164
  177
  191
  205
  220
  236
  252
  270
  288
  307
  326
  347
  369
Total liabilities, $m
  80
  87
  94
  101
  108
  116
  124
  132
  141
  150
  160
  169
  180
  190
  201
  213
  225
  237
  251
  264
  279
  294
  309
  326
  343
  361
  380
  400
  421
  442
Total equity, $m
  165
  178
  192
  207
  222
  238
  254
  271
  289
  308
  327
  347
  368
  390
  412
  436
  461
  486
  513
  542
  571
  602
  634
  668
  703
  740
  779
  819
  862
  906
Total liabilities and equity, $m
  245
  265
  286
  308
  330
  354
  378
  403
  430
  458
  487
  516
  548
  580
  613
  649
  686
  723
  764
  806
  850
  896
  943
  994
  1,046
  1,101
  1,159
  1,219
  1,283
  1,348
Debt-to-equity ratio
  0.040
  0.070
  0.110
  0.130
  0.160
  0.180
  0.200
  0.220
  0.230
  0.250
  0.260
  0.280
  0.290
  0.300
  0.310
  0.320
  0.330
  0.340
  0.340
  0.350
  0.360
  0.370
  0.370
  0.380
  0.380
  0.390
  0.390
  0.400
  0.400
  0.410
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
  31
  33
  36
  38
  41
  43
  46
  49
  52
  55
  59
  62
  66
  69
  73
  77
  81
  86
  90
  95
  100
  105
  111
  117
  123
  129
  136
  142
  150
  157
Depreciation, amort., depletion, $m
  13
  14
  15
  16
  17
  18
  19
  21
  22
  24
  25
  26
  28
  30
  31
  33
  35
  37
  39
  41
  43
  46
  48
  51
  53
  56
  59
  62
  66
  69
Funds from operations, $m
  44
  47
  50
  54
  58
  62
  66
  70
  74
  79
  84
  88
  94
  99
  105
  110
  116
  123
  129
  136
  144
  151
  159
  167
  176
  185
  195
  205
  215
  226
Change in working capital, $m
  2
  2
  2
  2
  2
  3
  3
  3
  3
  3
  3
  3
  3
  3
  4
  4
  4
  4
  4
  4
  5
  5
  5
  5
  6
  6
  6
  6
  7
  7
Cash from operations, $m
  41
  45
  48
  52
  55
  59
  63
  67
  71
  76
  80
  85
  90
  95
  101
  107
  113
  119
  125
  132
  139
  146
  154
  162
  171
  179
  189
  198
  208
  219
Maintenance CAPEX, $m
  -12
  -13
  -14
  -15
  -16
  -17
  -18
  -19
  -21
  -22
  -23
  -25
  -26
  -28
  -30
  -31
  -33
  -35
  -37
  -39
  -41
  -43
  -46
  -48
  -51
  -53
  -56
  -59
  -62
  -66
New CAPEX, $m
  -10
  -10
  -11
  -11
  -12
  -12
  -13
  -13
  -14
  -14
  -15
  -15
  -16
  -17
  -17
  -18
  -19
  -20
  -20
  -21
  -22
  -23
  -25
  -26
  -27
  -28
  -29
  -31
  -32
  -34
Cash from investing activities, $m
  -22
  -23
  -25
  -26
  -28
  -29
  -31
  -32
  -35
  -36
  -38
  -40
  -42
  -45
  -47
  -49
  -52
  -55
  -57
  -60
  -63
  -66
  -71
  -74
  -78
  -81
  -85
  -90
  -94
  -100
Free cash flow, $m
  20
  22
  24
  26
  28
  30
  32
  35
  37
  40
  42
  45
  48
  51
  54
  57
  61
  64
  68
  71
  75
  79
  84
  88
  93
  98
  103
  108
  114
  120
Issuance/(repayment) of debt, $m
  7
  7
  7
  7
  7
  8
  8
  8
  9
  9
  9
  10
  10
  11
  11
  12
  12
  13
  13
  14
  14
  15
  16
  16
  17
  18
  19
  20
  21
  22
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  
  7
  7
  7
  7
  7
  8
  8
  8
  9
  9
  9
  10
  10
  11
  11
  12
  12
  13
  13
  14
  14
  15
  16
  16
  17
  18
  19
  20
  21
  22
Total cash flow (excl. dividends), $m
  27
  29
  31
  33
  35
  38
  40
  43
  46
  49
  52
  55
  58
  62
  65
  69
  73
  77
  81
  85
  90
  94
  99
  105
  110
  116
  122
  128
  135
  141
Retained Cash Flow (-), $m
  -13
  -14
  -14
  -15
  -15
  -16
  -16
  -17
  -18
  -18
  -19
  -20
  -21
  -22
  -23
  -24
  -25
  -26
  -27
  -28
  -29
  -31
  -32
  -34
  -35
  -37
  -39
  -41
  -43
  -45
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
  1
  1
  1
  1
  2
  2
  2
  2
  2
  2
  2
  2
  3
  3
  3
  3
  3
  3
  4
  4
  4
  4
  4
  5
  5
  5
  5
  6
  6
  6
Cash available for distribution, $m
  214
  15
  17
  18
  20
  22
  24
  26
  28
  30
  33
  35
  37
  40
  42
  45
  48
  51
  54
  57
  60
  64
  67
  71
  75
  79
  83
  87
  92
  97
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
  206
  14
  14
  15
  16
  16
  16
  16
  16
  16
  15
  15
  14
  13
  12
  11
  10
  9
  8
  7
  6
  5
  4
  4
  3
  2
  2
  1
  1
  1
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

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 10.5
Price to Sales 2.3
Price to Book 1.8
Price to Tangible Book
Price to Cash Flow 6.5
Price to Free Cash Flow 6.9
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 million for the last fiscal year's total revenue generated by FutureFuel. The default revenue input number comes from 2017 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 8.6% 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 0.4%.

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 41.9%.

Life of production assets of 10 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 8.8%. 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 - $352 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 44 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 $0.6 billion.

RELATED COMPANIES Price Int.Val. Rating
REGI Renewable Ener 16.70 3.37  str.sell
ADM Archer Daniels 47.12 25.82  sell
GPRE Green Plains 15.90 4.87  str.sell

COMPANY NEWS

▶ 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]
Follow us on:   twitter   twitter   twitter   twitter

ASSET ALLOCATION

About X-FIN       Site news       Privacy policy       Terms of use       FAQ

Copyright © X-FIN.com 2005-2018. All rigths reserved.