Intrinsic value of Fairmount Santrol Holdings - FMSA

Previous Close

$5.63

  Intrinsic Value

$245.53

stock screener

  Rating & Target

str. buy

+999%

Previous close

$5.63

 
Intrinsic value

$245.53

 
Up/down potential

+999%

 
Rating

str. buy

We calculate the intrinsic value of FMSA 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 1.3

 

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, %
  60.00
  54.50
  49.55
  45.10
  41.09
  37.48
  34.23
  31.31
  28.68
  26.31
  24.18
  22.26
  20.53
  18.98
  17.58
  16.32
  15.19
  14.17
  13.26
  12.43
  11.69
  11.02
  10.42
  9.87
  9.39
  8.95
  8.55
  8.20
  7.88
  7.59
Revenue, $m
  1,536
  2,373
  3,549
  5,149
  7,265
  9,988
  13,407
  17,604
  22,652
  28,611
  35,528
  43,437
  52,356
  62,293
  73,246
  85,202
  98,146
  112,055
  126,909
  142,683
  159,358
  176,916
  195,344
  214,634
  234,782
  255,791
  277,670
  300,434
  324,104
  348,705
Variable operating expenses, $m
  488
  748
  1,113
  1,611
  2,268
  3,114
  4,176
  5,479
  7,048
  8,899
  11,037
  13,493
  16,264
  19,351
  22,753
  26,468
  30,489
  34,810
  39,424
  44,324
  49,504
  54,958
  60,683
  66,675
  72,934
  79,460
  86,257
  93,329
  100,681
  108,324
Fixed operating expenses, $m
  566
  579
  591
  604
  618
  631
  645
  659
  674
  689
  704
  719
  735
  751
  768
  785
  802
  820
  838
  856
  875
  894
  914
  934
  955
  976
  997
  1,019
  1,041
  1,064
Total operating expenses, $m
  1,054
  1,327
  1,704
  2,215
  2,886
  3,745
  4,821
  6,138
  7,722
  9,588
  11,741
  14,212
  16,999
  20,102
  23,521
  27,253
  31,291
  35,630
  40,262
  45,180
  50,379
  55,852
  61,597
  67,609
  73,889
  80,436
  87,254
  94,348
  101,722
  109,388
Operating income, $m
  482
  1,046
  1,844
  2,934
  4,380
  6,243
  8,586
  11,465
  14,930
  19,023
  23,788
  29,224
  35,357
  42,191
  49,724
  57,950
  66,855
  76,426
  86,647
  97,503
  108,979
  121,064
  133,747
  147,025
  160,893
  175,355
  190,416
  206,087
  222,381
  239,317
EBITDA, $m
  631
  1,272
  2,176
  3,410
  5,047
  7,156
  9,807
  13,065
  16,987
  21,618
  26,996
  33,146
  40,084
  47,816
  56,338
  65,644
  75,718
  86,545
  98,107
  110,387
  123,369
  137,039
  151,387
  166,406
  182,094
  198,453
  215,490
  233,216
  251,647
  270,805
Interest expense (income), $m
  61
  53
  93
  152
  234
  346
  494
  684
  923
  1,216
  1,569
  1,985
  2,469
  3,021
  3,645
  4,339
  5,104
  5,940
  6,844
  7,816
  8,854
  9,956
  11,122
  12,349
  13,636
  14,984
  16,392
  17,860
  19,389
  20,980
  22,634
Earnings before tax, $m
  429
  953
  1,692
  2,700
  4,034
  5,749
  7,902
  10,542
  13,714
  17,455
  21,802
  26,755
  32,335
  38,546
  45,385
  52,845
  60,915
  69,582
  78,831
  88,649
  99,023
  109,942
  121,399
  133,388
  145,909
  158,963
  172,556
  186,698
  201,401
  216,683
Tax expense, $m
  116
  257
  457
  729
  1,089
  1,552
  2,133
  2,846
  3,703
  4,713
  5,887
  7,224
  8,731
  10,407
  12,254
  14,268
  16,447
  18,787
  21,284
  23,935
  26,736
  29,684
  32,778
  36,015
  39,395
  42,920
  46,590
  50,408
  54,378
  58,505
Net income, $m
  313
  696
  1,235
  1,971
  2,945
  4,197
  5,768
  7,696
  10,011
  12,742
  15,916
  19,531
  23,605
  28,139
  33,131
  38,577
  44,468
  50,795
  57,547
  64,714
  72,287
  80,258
  88,621
  97,374
  106,514
  116,043
  125,966
  136,289
  147,023
  158,179

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
  2,024
  3,127
  4,676
  6,784
  9,572
  13,159
  17,663
  23,193
  29,844
  37,696
  46,809
  57,229
  68,980
  82,073
  96,503
  112,256
  129,309
  147,636
  167,205
  187,988
  209,958
  233,091
  257,370
  282,785
  309,330
  337,010
  365,837
  395,829
  427,014
  459,427
Adjusted assets (=assets-cash), $m
  2,024
  3,127
  4,676
  6,784
  9,572
  13,159
  17,663
  23,193
  29,844
  37,696
  46,809
  57,229
  68,980
  82,073
  96,503
  112,256
  129,309
  147,636
  167,205
  187,988
  209,958
  233,091
  257,370
  282,785
  309,330
  337,010
  365,837
  395,829
  427,014
  459,427
Revenue / Adjusted assets
  0.759
  0.759
  0.759
  0.759
  0.759
  0.759
  0.759
  0.759
  0.759
  0.759
  0.759
  0.759
  0.759
  0.759
  0.759
  0.759
  0.759
  0.759
  0.759
  0.759
  0.759
  0.759
  0.759
  0.759
  0.759
  0.759
  0.759
  0.759
  0.759
  0.759
Average production assets, $m
  1,387
  2,143
  3,205
  4,650
  6,560
  9,019
  12,106
  15,896
  20,454
  25,836
  32,082
  39,223
  47,277
  56,251
  66,141
  76,938
  88,626
  101,186
  114,599
  128,843
  143,900
  159,755
  176,396
  193,814
  212,008
  230,979
  250,736
  271,292
  292,666
  314,881
Working capital, $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 debt, $m
  1,315
  2,139
  3,297
  4,872
  6,954
  9,634
  12,998
  17,129
  22,097
  27,962
  34,770
  42,554
  51,332
  61,112
  71,891
  83,659
  96,398
  110,087
  124,706
  140,231
  156,642
  173,923
  192,059
  211,044
  230,873
  251,550
  273,084
  295,488
  318,783
  342,995
Total liabilities, $m
  1,512
  2,336
  3,493
  5,068
  7,150
  9,830
  13,195
  17,325
  22,294
  28,159
  34,967
  42,750
  51,528
  61,308
  72,088
  83,855
  96,594
  110,284
  124,902
  140,427
  156,838
  174,119
  192,256
  211,240
  231,070
  251,747
  273,280
  295,684
  318,979
  343,192
Total equity, $m
  512
  791
  1,183
  1,716
  2,422
  3,329
  4,469
  5,868
  7,551
  9,537
  11,843
  14,479
  17,452
  20,764
  24,415
  28,401
  32,715
  37,352
  42,303
  47,561
  53,119
  58,972
  65,115
  71,545
  78,261
  85,264
  92,557
  100,145
  108,035
  116,235
Total liabilities and equity, $m
  2,024
  3,127
  4,676
  6,784
  9,572
  13,159
  17,664
  23,193
  29,845
  37,696
  46,810
  57,229
  68,980
  82,072
  96,503
  112,256
  129,309
  147,636
  167,205
  187,988
  209,957
  233,091
  257,371
  282,785
  309,331
  337,011
  365,837
  395,829
  427,014
  459,427
Debt-to-equity ratio
  2.570
  2.700
  2.790
  2.840
  2.870
  2.890
  2.910
  2.920
  2.930
  2.930
  2.940
  2.940
  2.940
  2.940
  2.940
  2.950
  2.950
  2.950
  2.950
  2.950
  2.950
  2.950
  2.950
  2.950
  2.950
  2.950
  2.950
  2.950
  2.950
  2.950
Adjusted equity ratio
  0.253
  0.253
  0.253
  0.253
  0.253
  0.253
  0.253
  0.253
  0.253
  0.253
  0.253
  0.253
  0.253
  0.253
  0.253
  0.253
  0.253
  0.253
  0.253
  0.253
  0.253
  0.253
  0.253
  0.253
  0.253
  0.253
  0.253
  0.253
  0.253
  0.253

CASH FLOW

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Net income, $m
  313
  696
  1,235
  1,971
  2,945
  4,197
  5,768
  7,696
  10,011
  12,742
  15,916
  19,531
  23,605
  28,139
  33,131
  38,577
  44,468
  50,795
  57,547
  64,714
  72,287
  80,258
  88,621
  97,374
  106,514
  116,043
  125,966
  136,289
  147,023
  158,179
Depreciation, amort., depletion, $m
  150
  225
  331
  476
  667
  913
  1,222
  1,601
  2,056
  2,594
  3,208
  3,922
  4,728
  5,625
  6,614
  7,694
  8,863
  10,119
  11,460
  12,884
  14,390
  15,976
  17,640
  19,381
  21,201
  23,098
  25,074
  27,129
  29,267
  31,488
Funds from operations, $m
  462
  921
  1,567
  2,447
  3,612
  5,110
  6,990
  9,296
  12,068
  15,336
  19,124
  23,454
  28,332
  33,764
  39,745
  46,271
  53,331
  60,913
  69,007
  77,598
  86,677
  96,233
  106,261
  116,755
  127,714
  139,141
  151,040
  163,419
  176,289
  189,667
Change in working capital, $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 operations, $m
  462
  921
  1,567
  2,447
  3,612
  5,110
  6,990
  9,296
  12,068
  15,336
  19,124
  23,454
  28,332
  33,764
  39,745
  46,271
  53,331
  60,913
  69,007
  77,598
  86,677
  96,233
  106,261
  116,755
  127,714
  139,141
  151,040
  163,419
  176,289
  189,667
Maintenance CAPEX, $m
  -87
  -139
  -214
  -320
  -465
  -656
  -902
  -1,211
  -1,590
  -2,045
  -2,584
  -3,208
  -3,922
  -4,728
  -5,625
  -6,614
  -7,694
  -8,863
  -10,119
  -11,460
  -12,884
  -14,390
  -15,976
  -17,640
  -19,381
  -21,201
  -23,098
  -25,074
  -27,129
  -29,267
New CAPEX, $m
  -521
  -756
  -1,062
  -1,445
  -1,910
  -2,459
  -3,087
  -3,790
  -4,558
  -5,381
  -6,246
  -7,141
  -8,054
  -8,973
  -9,890
  -10,797
  -11,688
  -12,560
  -13,412
  -14,244
  -15,057
  -15,855
  -16,640
  -17,418
  -18,194
  -18,971
  -19,757
  -20,556
  -21,374
  -22,215
Cash from investing activities, $m
  -608
  -895
  -1,276
  -1,765
  -2,375
  -3,115
  -3,989
  -5,001
  -6,148
  -7,426
  -8,830
  -10,349
  -11,976
  -13,701
  -15,515
  -17,411
  -19,382
  -21,423
  -23,531
  -25,704
  -27,941
  -30,245
  -32,616
  -35,058
  -37,575
  -40,172
  -42,855
  -45,630
  -48,503
  -51,482
Free cash flow, $m
  -145
  26
  291
  682
  1,236
  1,995
  3,001
  4,296
  5,920
  7,910
  10,294
  13,104
  16,356
  20,063
  24,230
  28,860
  33,949
  39,490
  45,476
  51,894
  58,735
  65,988
  73,645
  81,697
  90,139
  98,969
  108,185
  117,789
  127,787
  138,185
Issuance/(repayment) of debt, $m
  566
  824
  1,157
  1,575
  2,082
  2,680
  3,365
  4,131
  4,968
  5,865
  6,808
  7,783
  8,778
  9,780
  10,779
  11,768
  12,739
  13,690
  14,618
  15,525
  16,411
  17,281
  18,137
  18,985
  19,829
  20,677
  21,533
  22,404
  23,295
  24,212
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  
  566
  824
  1,157
  1,575
  2,082
  2,680
  3,365
  4,131
  4,968
  5,865
  6,808
  7,783
  8,778
  9,780
  10,779
  11,768
  12,739
  13,690
  14,618
  15,525
  16,411
  17,281
  18,137
  18,985
  19,829
  20,677
  21,533
  22,404
  23,295
  24,212
Total cash flow (excl. dividends), $m
  421
  850
  1,448
  2,257
  3,318
  4,675
  6,366
  8,426
  10,888
  13,775
  17,102
  20,888
  25,134
  29,843
  35,010
  40,628
  46,688
  53,180
  60,094
  67,419
  75,146
  83,269
  91,781
  100,681
  109,969
  119,646
  129,718
  140,193
  151,082
  162,398
Retained Cash Flow (-), $m
  -192
  -279
  -392
  -533
  -705
  -908
  -1,140
  -1,399
  -1,683
  -1,986
  -2,306
  -2,636
  -2,973
  -3,312
  -3,651
  -3,986
  -4,315
  -4,637
  -4,951
  -5,258
  -5,558
  -5,853
  -6,143
  -6,430
  -6,716
  -7,003
  -7,293
  -7,588
  -7,890
  -8,200
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
  10
  15
  24
  35
  51
  73
  100
  134
  176
  227
  286
  355
  434
  524
  623
  732
  852
  981
  1,121
  1,269
  1,427
  1,594
  1,769
  1,953
  2,146
  2,348
  2,558
  2,777
  3,004
  3,241
Cash available for distribution, $m
  229
  571
  1,056
  1,723
  2,613
  3,767
  5,226
  7,027
  9,205
  11,788
  14,796
  18,251
  22,161
  26,530
  31,359
  36,642
  42,373
  48,544
  55,143
  62,161
  69,588
  77,416
  85,639
  94,252
  103,253
  112,643
  122,425
  132,605
  143,192
  154,197
Discount rate, %
  7.90
  8.30
  8.71
  9.15
  9.60
  10.08
  10.59
  11.12
  11.67
  12.26
  12.87
  13.51
  14.19
  14.90
  15.64
  16.42
  17.24
  18.11
  19.01
  19.96
  20.96
  22.01
  23.11
  24.27
  25.48
  26.75
  28.09
  29.49
  30.97
  32.52
PV of cash for distribution, $m
  213
  487
  822
  1,214
  1,652
  2,117
  2,584
  3,024
  3,408
  3,710
  3,907
  3,989
  3,950
  3,797
  3,545
  3,216
  2,835
  2,428
  2,020
  1,631
  1,279
  973
  718
  513
  355
  237
  153
  95
  57
  33
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

Fairmount Santrol Holdings Inc. is a provider of sand-based proppant solutions. The Company operates through two segments: Proppant Solutions, and Industrial & Recreational (I&R) Products. Its Proppant Solutions segment provides sand-based proppants for use in hydraulic fracturing operations throughout the United States and Canada, Argentina, Mexico, China, northern Europe and the United Arab Emirates. Its I&R segment provides raw, coated, and custom blended sands to the foundry, building products, glass, turf and landscape, and filtration industries in North America. Its asset base includes approximately 800 million tons of proven and probable mineral reserves. As of March 2017, the Company had 10 sand processing facilities with 16.8 million tons of annual sand processing capacity. Its coating facilities include operations in Mexico, Denmark and China, through which it serves international oil and gas markets.

FINANCIAL RATIOS  of  Fairmount Santrol Holdings (FMSA)

Valuation Ratios
P/E Ratio -9
Price to Sales 2.4
Price to Book 5
Price to Tangible Book
Price to Cash Flow -251.8
Price to Free Cash Flow -35
Growth Rates
Sales Growth Rate -35.5%
Sales - 3 Yr. Growth Rate %
EPS Growth Rate %
EPS - 3 Yr. Growth Rate %
Capital Spending Gr. Rate -72.8%
Cap. Spend. - 3 Yr. Gr. Rate -22.7%
Financial Strength
Quick Ratio 18
Current Ratio 0
LT Debt to Equity 331.5%
Total Debt to Equity 335.9%
Interest Coverage -3
Management Effectiveness
Return On Assets -8.2%
Ret/ On Assets - 3 Yr. Avg. 1.6%
Return On Total Capital -12.4%
Ret/ On T. Cap. - 3 Yr. Avg. -1.9%
Return On Equity -147.4%
Return On Equity - 3 Yr. Avg. 72.6%
Asset Turnover 0.4
Profitability Ratios
Gross Margin 14%
Gross Margin - 3 Yr. Avg. 25.9%
EBITDA Margin -18.5%
EBITDA Margin - 3 Yr. Avg. 4.7%
Operating Margin -32.5%
Oper. Margin - 3 Yr. Avg. -4.4%
Pre-Tax Margin -44.9%
Pre-Tax Margin - 3 Yr. Avg. -12.6%
Net Profit Margin -26.2%
Net Profit Margin - 3 Yr. Avg. -8.2%
Effective Tax Rate 41.7%
Eff/ Tax Rate - 3 Yr. Avg. 24.9%
Payout Ratio 0%

FMSA stock valuation input parameters

Revenue. Company's revenue (or sales) is always the starting point of any cash flow forecast. In the FMSA stock intrinsic value calculation we used $960 million for the last fiscal year's total revenue generated by Fairmount Santrol Holdings. The default revenue input number comes from 2017 income statement of Fairmount Santrol Holdings. 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 FMSA stock valuation model: a) initial revenue growth rate of 60% 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 7.9%, whose default value for FMSA is calculated based on our internal credit rating of Fairmount Santrol Holdings, 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 Fairmount Santrol Holdings.
    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 FMSA stock the variable cost ratio is equal to 32.2%.

Fixed operating expenses is just that - expenses that are not dependant on the volume of production. They are set to $554 million in the base year in the intrinsic value calculation for FMSA 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 7.1% for Fairmount Santrol Holdings.

Corporate tax rate of 27% is the nominal tax rate for Fairmount Santrol Holdings. 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 FMSA stock is equal to 1%.

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 FMSA are equal to 90.3%.

Life of production assets of 10 years is the average useful life of capital assets used in Fairmount Santrol Holdings 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 FMSA is equal to 0%. 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 - $320 million for Fairmount Santrol Holdings - 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 224 million for Fairmount Santrol Holdings 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 Fairmount Santrol Holdings at the current share price and the inputted number of shares is $1.3 billion.

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