Intrinsic value of FutureFuel - FF

Previous Close

$12.81

  Intrinsic Value

$29.85

stock screener

  Rating & Target

str. buy

+133%

Previous close

$12.81

 
Intrinsic value

$29.85

 
Up/down potential

+133%

 
Rating

str. buy

*Intrinsic value change (in %) minus stock price change (in %) in the past 12 months.

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.

Please visit our new site that uses elements of artificial intelligence for stock valuation: artificial intelligence value of FutureFuel (FF) stock.

STOCK VALUATION INPUT DATA

Initial revenue growth rate, %
Terminal revenue growth rate, %
Revenue decline factor
Initial discount rate, %
Discount rate multiplier
Shares outstanding, mln

 

FINANCIAL STATEMENTS FORECAST and PRESENT VALUE CALCULATION

Fiscal year
2016(a)
   2017
   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

INCOME STATEMENT

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Revenue growth rate, %
  -15.67
  13.00
  12.20
  11.48
  10.83
  10.25
  9.72
  9.25
  8.83
  8.44
  8.10
  7.79
  7.51
  7.26
  7.03
  6.83
  6.65
  6.48
  6.33
  6.20
  6.08
  5.97
  5.88
  5.79
  5.71
  5.64
  5.57
  5.52
  5.47
  5.42
  5.38
Revenue, $m
  253
  286
  321
  358
  396
  437
  479
  524
  570
  618
  668
  720
  774
  831
  889
  950
  1,013
  1,079
  1,147
  1,218
  1,292
  1,369
  1,450
  1,533
  1,621
  1,712
  1,808
  1,908
  2,012
  2,121
  2,235
Variable operating expenses, $m
 
  219
  246
  274
  304
  335
  368
  402
  437
  474
  513
  552
  594
  637
  682
  728
  777
  827
  880
  934
  991
  1,050
  1,112
  1,176
  1,243
  1,313
  1,387
  1,463
  1,543
  1,627
  1,714
Fixed operating expenses, $m
 
  25
  25
  26
  26
  27
  28
  29
  29
  30
  31
  31
  32
  33
  34
  35
  36
  37
  37
  38
  39
  40
  41
  42
  43
  44
  46
  47
  48
  49
  50
Total operating expenses, $m
  217
  244
  271
  300
  330
  362
  396
  431
  466
  504
  544
  583
  626
  670
  716
  763
  813
  864
  917
  972
  1,030
  1,090
  1,153
  1,218
  1,286
  1,357
  1,433
  1,510
  1,591
  1,676
  1,764
Operating income, $m
  37
  42
  50
  57
  66
  75
  84
  94
  104
  114
  125
  136
  148
  160
  173
  187
  200
  215
  230
  245
  262
  279
  296
  315
  334
  355
  376
  398
  421
  445
  470
EBITDA, $m
  48
  54
  64
  73
  83
  94
  105
  116
  128
  141
  154
  168
  182
  197
  212
  228
  245
  262
  280
  299
  318
  338
  360
  382
  405
  429
  454
  481
  509
  538
  568
Interest expense (income), $m
  0
  0
  1
  2
  3
  4
  5
  6
  7
  9
  10
  11
  13
  14
  16
  17
  19
  21
  22
  24
  26
  28
  30
  32
  35
  37
  40
  42
  45
  48
  51
Earnings before tax, $m
  41
  42
  49
  56
  63
  71
  79
  87
  96
  105
  115
  125
  135
  146
  158
  169
  181
  194
  207
  221
  236
  251
  266
  282
  300
  317
  336
  356
  376
  397
  420
Tax expense, $m
  -15
  11
  13
  15
  17
  19
  21
  24
  26
  28
  31
  34
  37
  39
  43
  46
  49
  52
  56
  60
  64
  68
  72
  76
  81
  86
  91
  96
  102
  107
  113
Net income, $m
  56
  31
  35
  41
  46
  52
  58
  64
  70
  77
  84
  91
  99
  107
  115
  124
  132
  142
  151
  161
  172
  183
  194
  206
  219
  232
  245
  260
  274
  290
  306

BALANCE SHEET

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Cash and short-term investments, $m
  305
  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
  529
  253
  284
  317
  351
  387
  425
  464
  505
  548
  592
  638
  686
  736
  787
  841
  897
  955
  1,016
  1,079
  1,144
  1,213
  1,284
  1,358
  1,436
  1,517
  1,601
  1,690
  1,782
  1,879
  1,980
Adjusted assets (=assets-cash), $m
  224
  253
  284
  317
  351
  387
  425
  464
  505
  548
  592
  638
  686
  736
  787
  841
  897
  955
  1,016
  1,079
  1,144
  1,213
  1,284
  1,358
  1,436
  1,517
  1,601
  1,690
  1,782
  1,879
  1,980
Revenue / Adjusted assets
  1.129
  1.130
  1.130
  1.129
  1.128
  1.129
  1.127
  1.129
  1.129
  1.128
  1.128
  1.129
  1.128
  1.129
  1.130
  1.130
  1.129
  1.130
  1.129
  1.129
  1.129
  1.129
  1.129
  1.129
  1.129
  1.129
  1.129
  1.129
  1.129
  1.129
  1.129
Average production assets, $m
  123
  138
  155
  173
  192
  211
  232
  254
  276
  299
  323
  349
  375
  402
  430
  460
  490
  522
  555
  589
  625
  663
  702
  742
  785
  829
  875
  923
  974
  1,027
  1,082
Working capital, $m
  261
  -50
  -56
  -62
  -69
  -76
  -83
  -91
  -99
  -108
  -116
  -125
  -135
  -145
  -155
  -165
  -176
  -188
  -200
  -212
  -225
  -238
  -252
  -267
  -282
  -298
  -315
  -332
  -350
  -369
  -389
Total debt, $m
  0
  26
  53
  81
  111
  143
  176
  210
  246
  283
  322
  362
  404
  448
  493
  540
  589
  640
  693
  748
  805
  865
  927
  992
  1,060
  1,131
  1,205
  1,282
  1,363
  1,448
  1,536
Total liabilities, $m
  196
  222
  249
  277
  307
  339
  372
  406
  442
  479
  518
  558
  600
  644
  689
  736
  785
  836
  889
  944
  1,001
  1,061
  1,123
  1,188
  1,256
  1,327
  1,401
  1,478
  1,559
  1,644
  1,732
Total equity, $m
  333
  32
  36
  40
  44
  48
  53
  58
  63
  68
  74
  80
  86
  92
  98
  105
  112
  119
  127
  135
  143
  152
  160
  170
  179
  190
  200
  211
  223
  235
  247
Total liabilities and equity, $m
  529
  254
  285
  317
  351
  387
  425
  464
  505
  547
  592
  638
  686
  736
  787
  841
  897
  955
  1,016
  1,079
  1,144
  1,213
  1,283
  1,358
  1,435
  1,517
  1,601
  1,689
  1,782
  1,879
  1,979
Debt-to-equity ratio
  0.000
  0.810
  1.480
  2.050
  2.530
  2.950
  3.310
  3.620
  3.890
  4.140
  4.350
  4.540
  4.710
  4.870
  5.010
  5.140
  5.250
  5.360
  5.460
  5.550
  5.630
  5.710
  5.780
  5.850
  5.910
  5.970
  6.020
  6.070
  6.120
  6.170
  6.210
Adjusted equity ratio
  0.125
  0.125
  0.125
  0.125
  0.125
  0.125
  0.125
  0.125
  0.125
  0.125
  0.125
  0.125
  0.125
  0.125
  0.125
  0.125
  0.125
  0.125
  0.125
  0.125
  0.125
  0.125
  0.125
  0.125
  0.125
  0.125
  0.125
  0.125
  0.125
  0.125
  0.125

CASH FLOW

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Net income, $m
  56
  31
  35
  41
  46
  52
  58
  64
  70
  77
  84
  91
  99
  107
  115
  124
  132
  142
  151
  161
  172
  183
  194
  206
  219
  232
  245
  260
  274
  290
  306
Depreciation, amort., depletion, $m
  11
  12
  14
  16
  17
  19
  21
  23
  25
  27
  29
  31
  34
  36
  39
  41
  44
  47
  50
  53
  56
  60
  63
  67
  71
  75
  79
  83
  88
  92
  97
Funds from operations, $m
  113
  43
  49
  56
  63
  71
  78
  87
  95
  104
  113
  123
  133
  143
  154
  165
  177
  189
  201
  215
  228
  243
  258
  273
  289
  306
  324
  343
  362
  383
  404
Change in working capital, $m
  22
  -6
  -6
  -6
  -7
  -7
  -7
  -8
  -8
  -8
  -9
  -9
  -9
  -10
  -10
  -11
  -11
  -11
  -12
  -12
  -13
  -13
  -14
  -15
  -15
  -16
  -17
  -17
  -18
  -19
  -20
Cash from operations, $m
  91
  49
  56
  63
  70
  78
  86
  94
  103
  112
  122
  132
  142
  153
  164
  176
  188
  200
  213
  227
  241
  256
  272
  288
  305
  322
  341
  360
  380
  402
  424
Maintenance CAPEX, $m
  0
  -11
  -12
  -14
  -16
  -17
  -19
  -21
  -23
  -25
  -27
  -29
  -31
  -34
  -36
  -39
  -41
  -44
  -47
  -50
  -53
  -56
  -60
  -63
  -67
  -71
  -75
  -79
  -83
  -88
  -92
New CAPEX, $m
  -5
  -16
  -17
  -18
  -19
  -20
  -21
  -21
  -22
  -23
  -24
  -25
  -26
  -27
  -28
  -29
  -31
  -32
  -33
  -34
  -36
  -37
  -39
  -41
  -42
  -44
  -46
  -48
  -50
  -53
  -55
Cash from investing activities, $m
  -35
  -27
  -29
  -32
  -35
  -37
  -40
  -42
  -45
  -48
  -51
  -54
  -57
  -61
  -64
  -68
  -72
  -76
  -80
  -84
  -89
  -93
  -99
  -104
  -109
  -115
  -121
  -127
  -133
  -141
  -147
Free cash flow, $m
  56
  22
  26
  31
  36
  41
  46
  52
  58
  64
  71
  77
  84
  92
  99
  107
  116
  124
  133
  143
  152
  162
  173
  184
  195
  207
  220
  233
  247
  261
  276
Issuance/(repayment) of debt, $m
  0
  26
  27
  29
  30
  31
  33
  34
  36
  37
  39
  40
  42
  44
  45
  47
  49
  51
  53
  55
  57
  60
  62
  65
  68
  71
  74
  77
  81
  84
  88
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
  0
Cash from financing (excl. dividends), $m  
  -1
  26
  27
  29
  30
  31
  33
  34
  36
  37
  39
  40
  42
  44
  45
  47
  49
  51
  53
  55
  57
  60
  62
  65
  68
  71
  74
  77
  81
  84
  88
Total cash flow (excl. dividends), $m
  55
  48
  53
  59
  66
  72
  79
  86
  94
  101
  109
  118
  126
  135
  145
  154
  165
  175
  186
  198
  210
  222
  235
  249
  263
  278
  294
  310
  327
  346
  364
Retained Cash Flow (-), $m
  61
  -4
  -4
  -4
  -4
  -4
  -5
  -5
  -5
  -5
  -6
  -6
  -6
  -6
  -6
  -7
  -7
  -7
  -8
  -8
  -8
  -9
  -9
  -9
  -10
  -10
  -11
  -11
  -12
  -12
  -13
Prev. year cash balance distribution, $m
 
  305
  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
 
  349
  49
  55
  61
  68
  74
  81
  89
  96
  104
  112
  120
  129
  138
  148
  158
  168
  179
  190
  201
  214
  226
  240
  254
  268
  283
  299
  316
  333
  352
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
 
  334
  45
  48
  51
  53
  54
  55
  55
  55
  54
  53
  51
  49
  46
  43
  40
  37
  33
  29
  26
  22
  19
  16
  13
  10
  8
  6
  5
  4
  3
Current shareholders' claim on cash, %
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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
Price to Sales 2.2
Price to Book 1.7
Price to Tangible Book
Price to Cash Flow 6.2
Price to Free Cash Flow 6.5
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 $253 million for the last fiscal year's total revenue generated by FutureFuel. The default revenue input number comes from 2016 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 13% 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 76.7%.

Fixed operating expenses is just that - expenses that are not dependant on the volume of production. They are set to $24 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 3.5% 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 48.4%.

Life of production assets of 11.1 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 -17.4%. 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 - $333 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 44.363 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
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COMPANY NEWS

▶ 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]
▶ 2 chemical stocks to buy and 2 to sell   [Nov-27-16 08:04AM  at MarketWatch]
Financial statements of FF
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