Intrinsic value of FTS International, Inc. - FTSI

Previous Close

$2.73

  Intrinsic Value

$30.25

stock screener

  Rating & Target

str. buy

+999%

Previous close

$2.73

 
Intrinsic value

$30.25

 
Up/down potential

+999%

 
Rating

str. buy

We calculate the intrinsic value of FTSI 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, %
  2.00
  2.30
  2.57
  2.81
  3.03
  3.23
  3.41
  3.57
  3.71
  3.84
  3.95
  4.06
  4.15
  4.24
  4.31
  4.38
  4.44
  4.50
  4.55
  4.59
  4.64
  4.67
  4.70
  4.73
  4.76
  4.78
  4.81
  4.83
  4.84
  4.86
Revenue, $m
  1,574
  1,610
  1,651
  1,698
  1,749
  1,806
  1,867
  1,934
  2,006
  2,083
  2,165
  2,253
  2,346
  2,446
  2,551
  2,663
  2,781
  2,907
  3,039
  3,178
  3,326
  3,481
  3,645
  3,818
  3,999
  4,191
  4,392
  4,604
  4,827
  5,061
Variable operating expenses, $m
  1,023
  1,046
  1,073
  1,103
  1,137
  1,173
  1,213
  1,256
  1,303
  1,353
  1,403
  1,460
  1,521
  1,585
  1,653
  1,726
  1,803
  1,884
  1,969
  2,060
  2,155
  2,256
  2,362
  2,474
  2,592
  2,716
  2,846
  2,984
  3,128
  3,280
Fixed operating expenses, $m
  232
  237
  242
  248
  253
  259
  264
  270
  276
  282
  288
  295
  301
  308
  315
  322
  329
  336
  343
  351
  359
  366
  374
  383
  391
  400
  409
  417
  427
  436
Total operating expenses, $m
  1,255
  1,283
  1,315
  1,351
  1,390
  1,432
  1,477
  1,526
  1,579
  1,635
  1,691
  1,755
  1,822
  1,893
  1,968
  2,048
  2,132
  2,220
  2,312
  2,411
  2,514
  2,622
  2,736
  2,857
  2,983
  3,116
  3,255
  3,401
  3,555
  3,716
Operating income, $m
  319
  327
  336
  347
  360
  374
  390
  407
  427
  448
  474
  498
  525
  553
  583
  616
  650
  687
  726
  768
  812
  859
  908
  961
  1,016
  1,075
  1,137
  1,203
  1,272
  1,345
EBITDA, $m
  381
  390
  401
  413
  428
  444
  463
  483
  505
  529
  555
  582
  612
  644
  679
  715
  754
  796
  840
  887
  936
  989
  1,045
  1,104
  1,166
  1,232
  1,302
  1,375
  1,453
  1,535
Interest expense (income), $m
  0
  31
  31
  32
  33
  34
  35
  37
  38
  40
  42
  44
  46
  48
  50
  53
  55
  58
  61
  64
  67
  71
  74
  78
  82
  87
  91
  96
  101
  106
  112
Earnings before tax, $m
  288
  296
  304
  314
  326
  339
  353
  369
  387
  406
  430
  452
  477
  503
  531
  560
  592
  626
  662
  701
  741
  784
  830
  878
  930
  984
  1,041
  1,102
  1,166
  1,234
Tax expense, $m
  78
  80
  82
  85
  88
  91
  95
  100
  104
  110
  116
  122
  129
  136
  143
  151
  160
  169
  179
  189
  200
  212
  224
  237
  251
  266
  281
  298
  315
  333
Net income, $m
  210
  216
  222
  229
  238
  247
  258
  270
  282
  296
  314
  330
  348
  367
  387
  409
  432
  457
  483
  511
  541
  573
  606
  641
  679
  718
  760
  804
  851
  900

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
  712
  729
  747
  768
  792
  817
  845
  875
  908
  942
  980
  1,019
  1,062
  1,107
  1,154
  1,205
  1,259
  1,315
  1,375
  1,438
  1,505
  1,575
  1,649
  1,727
  1,810
  1,896
  1,987
  2,083
  2,184
  2,290
Adjusted assets (=assets-cash), $m
  712
  729
  747
  768
  792
  817
  845
  875
  908
  942
  980
  1,019
  1,062
  1,107
  1,154
  1,205
  1,259
  1,315
  1,375
  1,438
  1,505
  1,575
  1,649
  1,727
  1,810
  1,896
  1,987
  2,083
  2,184
  2,290
Revenue / Adjusted assets
  2.211
  2.209
  2.210
  2.211
  2.208
  2.211
  2.209
  2.210
  2.209
  2.211
  2.209
  2.211
  2.209
  2.210
  2.211
  2.210
  2.209
  2.211
  2.210
  2.210
  2.210
  2.210
  2.210
  2.211
  2.209
  2.210
  2.210
  2.210
  2.210
  2.210
Average production assets, $m
  294
  301
  309
  318
  327
  338
  349
  362
  375
  389
  405
  421
  439
  457
  477
  498
  520
  544
  568
  594
  622
  651
  682
  714
  748
  784
  821
  861
  903
  946
Working capital, $m
  101
  103
  106
  109
  112
  116
  120
  124
  128
  133
  139
  144
  150
  157
  163
  170
  178
  186
  194
  203
  213
  223
  233
  244
  256
  268
  281
  295
  309
  324
Total debt, $m
  507
  522
  539
  558
  579
  602
  627
  654
  683
  715
  748
  784
  822
  862
  905
  951
  999
  1,050
  1,104
  1,161
  1,221
  1,284
  1,351
  1,421
  1,495
  1,573
  1,655
  1,741
  1,832
  1,928
Total liabilities, $m
  641
  656
  673
  691
  712
  735
  760
  788
  817
  848
  882
  917
  956
  996
  1,039
  1,085
  1,133
  1,184
  1,238
  1,294
  1,354
  1,418
  1,484
  1,555
  1,629
  1,707
  1,789
  1,875
  1,966
  2,061
Total equity, $m
  71
  73
  75
  77
  79
  82
  84
  88
  91
  94
  98
  102
  106
  111
  115
  121
  126
  132
  138
  144
  150
  158
  165
  173
  181
  190
  199
  208
  218
  229
Total liabilities and equity, $m
  712
  729
  748
  768
  791
  817
  844
  876
  908
  942
  980
  1,019
  1,062
  1,107
  1,154
  1,206
  1,259
  1,316
  1,376
  1,438
  1,504
  1,576
  1,649
  1,728
  1,810
  1,897
  1,988
  2,083
  2,184
  2,290
Debt-to-equity ratio
  7.120
  7.170
  7.210
  7.260
  7.310
  7.360
  7.420
  7.470
  7.530
  7.580
  7.640
  7.690
  7.740
  7.790
  7.840
  7.890
  7.940
  7.980
  8.030
  8.070
  8.110
  8.150
  8.190
  8.230
  8.260
  8.300
  8.330
  8.360
  8.390
  8.420
Adjusted equity ratio
  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
  0.100

CASH FLOW

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Net income, $m
  210
  216
  222
  229
  238
  247
  258
  270
  282
  296
  314
  330
  348
  367
  387
  409
  432
  457
  483
  511
  541
  573
  606
  641
  679
  718
  760
  804
  851
  900
Depreciation, amort., depletion, $m
  62
  63
  65
  67
  68
  71
  73
  75
  78
  81
  81
  84
  88
  91
  95
  100
  104
  109
  114
  119
  124
  130
  136
  143
  150
  157
  164
  172
  181
  189
Funds from operations, $m
  272
  279
  287
  296
  306
  318
  331
  345
  360
  377
  395
  415
  436
  459
  483
  509
  536
  566
  597
  630
  665
  703
  742
  784
  828
  875
  924
  977
  1,032
  1,090
Change in working capital, $m
  2
  2
  3
  3
  3
  4
  4
  4
  5
  5
  5
  6
  6
  6
  7
  7
  8
  8
  8
  9
  9
  10
  10
  11
  12
  12
  13
  14
  14
  15
Cash from operations, $m
  270
  277
  284
  293
  303
  314
  327
  341
  356
  372
  390
  409
  430
  452
  476
  502
  529
  558
  589
  621
  656
  693
  732
  773
  817
  863
  912
  963
  1,017
  1,075
Maintenance CAPEX, $m
  -58
  -59
  -60
  -62
  -64
  -65
  -68
  -70
  -72
  -75
  -78
  -81
  -84
  -88
  -91
  -95
  -100
  -104
  -109
  -114
  -119
  -124
  -130
  -136
  -143
  -150
  -157
  -164
  -172
  -181
New CAPEX, $m
  -6
  -7
  -8
  -9
  -10
  -11
  -12
  -12
  -13
  -14
  -15
  -16
  -17
  -19
  -20
  -21
  -22
  -23
  -25
  -26
  -28
  -29
  -31
  -32
  -34
  -36
  -38
  -40
  -42
  -44
Cash from investing activities, $m
  -64
  -66
  -68
  -71
  -74
  -76
  -80
  -82
  -85
  -89
  -93
  -97
  -101
  -107
  -111
  -116
  -122
  -127
  -134
  -140
  -147
  -153
  -161
  -168
  -177
  -186
  -195
  -204
  -214
  -225
Free cash flow, $m
  206
  211
  216
  222
  230
  238
  248
  258
  270
  283
  296
  312
  328
  346
  365
  385
  407
  430
  455
  482
  510
  539
  571
  604
  640
  677
  717
  759
  803
  850
Issuance/(repayment) of debt, $m
  4
  15
  17
  19
  21
  23
  25
  27
  29
  31
  34
  36
  38
  40
  43
  46
  48
  51
  54
  57
  60
  63
  67
  70
  74
  78
  82
  86
  91
  96
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  
  4
  15
  17
  19
  21
  23
  25
  27
  29
  31
  34
  36
  38
  40
  43
  46
  48
  51
  54
  57
  60
  63
  67
  70
  74
  78
  82
  86
  91
  96
Total cash flow (excl. dividends), $m
  211
  226
  233
  241
  251
  261
  273
  285
  299
  314
  330
  347
  366
  386
  408
  431
  455
  481
  509
  538
  570
  603
  638
  675
  714
  755
  799
  845
  894
  946
Retained Cash Flow (-), $m
  -10
  -2
  -2
  -2
  -2
  -3
  -3
  -3
  -3
  -3
  -4
  -4
  -4
  -4
  -5
  -5
  -5
  -6
  -6
  -6
  -7
  -7
  -7
  -8
  -8
  -9
  -9
  -10
  -10
  -11
Prev. year cash balance distribution, $m
  45
  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
  246
  224
  231
  239
  248
  259
  270
  282
  296
  311
  326
  343
  362
  382
  403
  426
  450
  476
  503
  532
  563
  596
  630
  667
  706
  747
  790
  836
  884
  935
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
  236
  205
  201
  197
  192
  188
  182
  177
  170
  163
  155
  147
  138
  128
  118
  108
  98
  88
  77
  68
  58
  49
  41
  34
  27
  22
  17
  13
  10
  7
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

FINANCIAL RATIOS  of  FTS International, Inc. (FTSI)

Valuation Ratios
P/E Ratio 0
Price to Sales 0
Price to Book 0
Price to Tangible Book
Price to Cash Flow 0
Price to Free Cash Flow 0
Growth Rates
Sales Growth Rate -100%
Sales - 3 Yr. Growth Rate %
EPS Growth Rate %
EPS - 3 Yr. Growth Rate %
Capital Spending Gr. Rate NaN%
Cap. Spend. - 3 Yr. Gr. Rate NaN%
Financial Strength
Quick Ratio NaN
Current Ratio NaN
LT Debt to Equity 0%
Total Debt to Equity 0%
Interest Coverage 0
Management Effectiveness
Return On Assets 0%
Ret/ On Assets - 3 Yr. Avg. 0%
Return On Total Capital 0%
Ret/ On T. Cap. - 3 Yr. Avg. 0%
Return On Equity 0%
Return On Equity - 3 Yr. Avg. 0%
Asset Turnover 0
Profitability Ratios
Gross Margin 0%
Gross Margin - 3 Yr. Avg. 0%
EBITDA Margin 0%
EBITDA Margin - 3 Yr. Avg. 0%
Operating Margin 0%
Oper. Margin - 3 Yr. Avg. 0%
Pre-Tax Margin 0%
Pre-Tax Margin - 3 Yr. Avg. 0%
Net Profit Margin 0%
Net Profit Margin - 3 Yr. Avg. 0%
Effective Tax Rate 0%
Eff/ Tax Rate - 3 Yr. Avg. 0%
Payout Ratio 0%

FTSI stock valuation input parameters

Revenue. Company's revenue (or sales) is always the starting point of any cash flow forecast. In the FTSI stock intrinsic value calculation we used $1543 million for the last fiscal year's total revenue generated by FTS International, Inc.. The default revenue input number comes from 0001 income statement of FTS International, 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 FTSI stock valuation model: a) initial revenue growth rate of 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 4.3%, whose default value for FTSI is calculated based on our internal credit rating of FTS International, 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 FTS International, 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 FTSI stock the variable cost ratio is equal to 65%.

Fixed operating expenses is just that - expenses that are not dependant on the volume of production. They are set to $227 million in the base year in the intrinsic value calculation for FTSI 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 6.1% for FTS International, Inc..

Corporate tax rate of 27% is the nominal tax rate for FTS International, 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 FTSI 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 FTSI are equal to 18.7%.

Life of production assets of 3.6 years is the average useful life of capital assets used in FTS International, 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 FTSI is equal to 6.4%. 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 - $106.9 million for FTS International, 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 110.053 million for FTS International, 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 FTS International, Inc. at the current share price and the inputted number of shares is $0.3 billion.

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