Intrinsic value of Green Plains, Inc. - GPRE

Previous Close

$7.50

  Intrinsic Value

$19.95

stock screener

  Rating & Target

str. buy

+166%

Previous close

$7.50

 
Intrinsic value

$19.95

 
Up/down potential

+166%

 
Rating

str. buy

We calculate the intrinsic value of GPRE 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
  3,920
  4,010
  4,113
  4,229
  4,357
  4,498
  4,651
  4,817
  4,995
  5,187
  5,392
  5,611
  5,844
  6,092
  6,354
  6,633
  6,928
  7,239
  7,569
  7,916
  8,283
  8,670
  9,078
  9,508
  9,961
  10,437
  10,939
  11,467
  12,022
  12,606
Variable operating expenses, $m
  2,750
  2,811
  2,881
  2,960
  3,047
  3,142
  3,246
  3,359
  3,480
  3,610
  3,661
  3,809
  3,968
  4,136
  4,314
  4,503
  4,703
  4,915
  5,138
  5,375
  5,624
  5,886
  6,163
  6,455
  6,762
  7,086
  7,427
  7,785
  8,162
  8,559
Fixed operating expenses, $m
  1,077
  1,101
  1,125
  1,150
  1,175
  1,201
  1,227
  1,254
  1,282
  1,310
  1,339
  1,369
  1,399
  1,429
  1,461
  1,493
  1,526
  1,559
  1,594
  1,629
  1,665
  1,701
  1,739
  1,777
  1,816
  1,856
  1,897
  1,938
  1,981
  2,025
Total operating expenses, $m
  3,827
  3,912
  4,006
  4,110
  4,222
  4,343
  4,473
  4,613
  4,762
  4,920
  5,000
  5,178
  5,367
  5,565
  5,775
  5,996
  6,229
  6,474
  6,732
  7,004
  7,289
  7,587
  7,902
  8,232
  8,578
  8,942
  9,324
  9,723
  10,143
  10,584
Operating income, $m
  93
  98
  107
  119
  135
  154
  177
  203
  233
  266
  392
  433
  478
  526
  579
  637
  698
  765
  836
  913
  995
  1,083
  1,176
  1,276
  1,382
  1,495
  1,615
  1,743
  1,879
  2,023
EBITDA, $m
  282
  290
  301
  317
  336
  359
  386
  416
  450
  489
  531
  577
  628
  683
  743
  807
  877
  951
  1,031
  1,117
  1,208
  1,306
  1,410
  1,521
  1,638
  1,764
  1,897
  2,038
  2,188
  2,347
Interest expense (income), $m
  38
  80
  82
  85
  88
  91
  94
  98
  103
  107
  112
  118
  123
  129
  136
  143
  150
  158
  166
  175
  184
  194
  204
  215
  226
  238
  251
  264
  278
  293
  308
Earnings before tax, $m
  12
  16
  22
  32
  44
  60
  79
  101
  126
  154
  275
  310
  348
  391
  437
  486
  541
  599
  662
  729
  801
  879
  961
  1,050
  1,144
  1,244
  1,351
  1,465
  1,586
  1,715
Tax expense, $m
  3
  4
  6
  9
  12
  16
  21
  27
  34
  42
  74
  84
  94
  105
  118
  131
  146
  162
  179
  197
  216
  237
  260
  283
  309
  336
  365
  396
  428
  463
Net income, $m
  9
  11
  16
  23
  32
  44
  57
  74
  92
  113
  200
  226
  254
  285
  319
  355
  395
  437
  483
  532
  585
  641
  702
  766
  835
  908
  987
  1,070
  1,158
  1,252

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
  2,181
  2,232
  2,289
  2,353
  2,425
  2,503
  2,588
  2,680
  2,780
  2,886
  3,001
  3,122
  3,252
  3,390
  3,536
  3,691
  3,855
  4,029
  4,212
  4,405
  4,610
  4,825
  5,052
  5,291
  5,543
  5,808
  6,087
  6,381
  6,690
  7,015
Adjusted assets (=assets-cash), $m
  2,181
  2,232
  2,289
  2,353
  2,425
  2,503
  2,588
  2,680
  2,780
  2,886
  3,001
  3,122
  3,252
  3,390
  3,536
  3,691
  3,855
  4,029
  4,212
  4,405
  4,610
  4,825
  5,052
  5,291
  5,543
  5,808
  6,087
  6,381
  6,690
  7,015
Revenue / Adjusted assets
  1.797
  1.797
  1.797
  1.797
  1.797
  1.797
  1.797
  1.797
  1.797
  1.797
  1.797
  1.797
  1.797
  1.797
  1.797
  1.797
  1.797
  1.797
  1.797
  1.797
  1.797
  1.797
  1.797
  1.797
  1.797
  1.797
  1.797
  1.797
  1.797
  1.797
Average production assets, $m
  1,109
  1,135
  1,164
  1,197
  1,233
  1,273
  1,316
  1,363
  1,414
  1,468
  1,526
  1,588
  1,654
  1,724
  1,798
  1,877
  1,960
  2,049
  2,142
  2,240
  2,344
  2,454
  2,569
  2,691
  2,819
  2,954
  3,096
  3,245
  3,402
  3,568
Working capital, $m
  662
  678
  695
  715
  736
  760
  786
  814
  844
  877
  911
  948
  988
  1,029
  1,074
  1,121
  1,171
  1,223
  1,279
  1,338
  1,400
  1,465
  1,534
  1,607
  1,683
  1,764
  1,849
  1,938
  2,032
  2,130
Total debt, $m
  914
  942
  974
  1,010
  1,050
  1,093
  1,141
  1,192
  1,248
  1,307
  1,370
  1,438
  1,511
  1,587
  1,669
  1,755
  1,846
  1,943
  2,045
  2,153
  2,267
  2,387
  2,513
  2,646
  2,787
  2,934
  3,090
  3,253
  3,426
  3,607
Total liabilities, $m
  1,215
  1,243
  1,275
  1,311
  1,350
  1,394
  1,442
  1,493
  1,548
  1,608
  1,671
  1,739
  1,811
  1,888
  1,970
  2,056
  2,147
  2,244
  2,346
  2,454
  2,568
  2,687
  2,814
  2,947
  3,087
  3,235
  3,391
  3,554
  3,726
  3,907
Total equity, $m
  966
  989
  1,014
  1,042
  1,074
  1,109
  1,147
  1,187
  1,231
  1,279
  1,329
  1,383
  1,441
  1,502
  1,566
  1,635
  1,708
  1,785
  1,866
  1,952
  2,042
  2,137
  2,238
  2,344
  2,456
  2,573
  2,697
  2,827
  2,964
  3,108
Total liabilities and equity, $m
  2,181
  2,232
  2,289
  2,353
  2,424
  2,503
  2,589
  2,680
  2,779
  2,887
  3,000
  3,122
  3,252
  3,390
  3,536
  3,691
  3,855
  4,029
  4,212
  4,406
  4,610
  4,824
  5,052
  5,291
  5,543
  5,808
  6,088
  6,381
  6,690
  7,015
Debt-to-equity ratio
  0.950
  0.950
  0.960
  0.970
  0.980
  0.990
  0.990
  1.000
  1.010
  1.020
  1.030
  1.040
  1.050
  1.060
  1.070
  1.070
  1.080
  1.090
  1.100
  1.100
  1.110
  1.120
  1.120
  1.130
  1.130
  1.140
  1.150
  1.150
  1.160
  1.160
Adjusted equity ratio
  0.443
  0.443
  0.443
  0.443
  0.443
  0.443
  0.443
  0.443
  0.443
  0.443
  0.443
  0.443
  0.443
  0.443
  0.443
  0.443
  0.443
  0.443
  0.443
  0.443
  0.443
  0.443
  0.443
  0.443
  0.443
  0.443
  0.443
  0.443
  0.443
  0.443

CASH FLOW

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Net income, $m
  9
  11
  16
  23
  32
  44
  57
  74
  92
  113
  200
  226
  254
  285
  319
  355
  395
  437
  483
  532
  585
  641
  702
  766
  835
  908
  987
  1,070
  1,158
  1,252
Depreciation, amort., depletion, $m
  190
  192
  195
  197
  201
  204
  208
  213
  217
  222
  139
  144
  150
  157
  163
  171
  178
  186
  195
  204
  213
  223
  234
  245
  256
  269
  281
  295
  309
  324
Funds from operations, $m
  199
  203
  211
  221
  233
  248
  266
  286
  309
  335
  339
  370
  405
  442
  482
  526
  573
  623
  678
  736
  798
  864
  935
  1,011
  1,091
  1,177
  1,268
  1,365
  1,467
  1,576
Change in working capital, $m
  13
  15
  17
  20
  22
  24
  26
  28
  30
  32
  35
  37
  39
  42
  44
  47
  50
  53
  56
  59
  62
  65
  69
  73
  76
  81
  85
  89
  94
  99
Cash from operations, $m
  186
  188
  193
  201
  211
  224
  240
  258
  279
  302
  305
  333
  365
  400
  438
  479
  523
  571
  622
  677
  736
  799
  866
  938
  1,015
  1,096
  1,183
  1,275
  1,373
  1,477
Maintenance CAPEX, $m
  -99
  -101
  -103
  -106
  -109
  -112
  -116
  -120
  -124
  -129
  -133
  -139
  -144
  -150
  -157
  -163
  -171
  -178
  -186
  -195
  -204
  -213
  -223
  -234
  -245
  -256
  -269
  -281
  -295
  -309
New CAPEX, $m
  -23
  -26
  -29
  -33
  -36
  -40
  -43
  -47
  -51
  -54
  -58
  -62
  -66
  -70
  -74
  -79
  -83
  -88
  -93
  -98
  -104
  -110
  -115
  -122
  -128
  -135
  -142
  -149
  -157
  -165
Cash from investing activities, $m
  -122
  -127
  -132
  -139
  -145
  -152
  -159
  -167
  -175
  -183
  -191
  -201
  -210
  -220
  -231
  -242
  -254
  -266
  -279
  -293
  -308
  -323
  -338
  -356
  -373
  -391
  -411
  -430
  -452
  -474
Free cash flow, $m
  64
  62
  61
  62
  66
  72
  81
  92
  104
  120
  113
  133
  155
  180
  207
  236
  269
  304
  343
  384
  428
  476
  528
  583
  642
  705
  773
  845
  921
  1,003
Issuance/(repayment) of debt, $m
  23
  28
  32
  36
  40
  44
  47
  51
  55
  59
  64
  68
  72
  77
  81
  86
  91
  97
  102
  108
  114
  120
  126
  133
  140
  148
  155
  164
  172
  181
Issuance/(repurchase) of shares, $m
  10
  11
  9
  5
  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  
  33
  39
  41
  41
  40
  44
  47
  51
  55
  59
  64
  68
  72
  77
  81
  86
  91
  97
  102
  108
  114
  120
  126
  133
  140
  148
  155
  164
  172
  181
Total cash flow (excl. dividends), $m
  97
  100
  102
  104
  106
  116
  128
  143
  160
  179
  177
  201
  227
  256
  288
  323
  360
  401
  445
  492
  542
  596
  654
  716
  782
  853
  928
  1,008
  1,093
  1,184
Retained Cash Flow (-), $m
  -20
  -22
  -25
  -29
  -32
  -35
  -38
  -41
  -44
  -47
  -51
  -54
  -57
  -61
  -65
  -69
  -73
  -77
  -81
  -86
  -90
  -95
  -101
  -106
  -112
  -117
  -124
  -130
  -137
  -144
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
  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
  77
  78
  77
  75
  74
  81
  91
  102
  116
  132
  126
  147
  170
  195
  223
  254
  288
  324
  363
  406
  452
  501
  554
  610
  671
  736
  805
  878
  956
  1,040
Discount rate, %
  7.20
  7.56
  7.94
  8.33
  8.75
  9.19
  9.65
  10.13
  10.64
  11.17
  11.73
  12.31
  12.93
  13.58
  14.26
  14.97
  15.72
  16.50
  17.33
  18.19
  19.10
  20.06
  21.06
  22.11
  23.22
  24.38
  25.60
  26.88
  28.22
  29.64
PV of cash for distribution, $m
  72
  68
  61
  55
  49
  48
  48
  47
  47
  46
  37
  36
  35
  33
  30
  27
  24
  21
  17
  14
  11
  9
  7
  5
  4
  3
  2
  1
  1
  0
Current shareholders' claim on cash, %
  98.5
  96.9
  95.6
  94.9
  94.9
  94.9
  94.9
  94.9
  94.9
  94.9
  94.9
  94.9
  94.9
  94.9
  94.9
  94.9
  94.9
  94.9
  94.9
  94.9
  94.9
  94.9
  94.9
  94.9
  94.9
  94.9
  94.9
  94.9
  94.9
  94.9

Green Plains Inc. is an ethanol producer. The Company owns and operates assets throughout the ethanol value chain, including upstream, with grain handling and storage through its ethanol production facilities, and downstream, with marketing and distribution services. It operates through four segments: Ethanol Production, Agribusiness and Energy Services, Food and Food Ingredients, and Partnership. The ethanol production segment includes production of ethanol, distillers grains and corn oil. The agribusiness and energy services segment includes grain procurement. The food and food ingredients segment includes a cattle feedlot operation. The Company's master limited partnership, Green Plains Partners LP (the partnership), provides fuel storage and transportation services by owning, operating, developing and acquiring ethanol and fuel storage tanks, terminals, transportation assets and other related assets and businesses.

FINANCIAL RATIOS  of  Green Plains, Inc. (GPRE)

Valuation Ratios
P/E Ratio 26.2
Price to Sales 0.1
Price to Book 0.3
Price to Tangible Book
Price to Cash Flow 3.5
Price to Free Cash Flow 11.5
Growth Rates
Sales Growth Rate 15%
Sales - 3 Yr. Growth Rate %
EPS Growth Rate %
EPS - 3 Yr. Growth Rate %
Capital Spending Gr. Rate -7.9%
Cap. Spend. - 3 Yr. Gr. Rate 23.7%
Financial Strength
Quick Ratio 1
Current Ratio 0.2
LT Debt to Equity 90.7%
Total Debt to Equity 128.5%
Interest Coverage 2
Management Effectiveness
Return On Assets 1.9%
Ret/ On Assets - 3 Yr. Avg. 4.9%
Return On Total Capital 0.6%
Ret/ On T. Cap. - 3 Yr. Avg. 4.3%
Return On Equity 1.3%
Return On Equity - 3 Yr. Avg. 8.7%
Asset Turnover 1.5
Profitability Ratios
Gross Margin 8.7%
Gross Margin - 3 Yr. Avg. 9.5%
EBITDA Margin 4.7%
EBITDA Margin - 3 Yr. Avg. 6.6%
Operating Margin 2.7%
Oper. Margin - 3 Yr. Avg. 4.5%
Pre-Tax Margin 1.1%
Pre-Tax Margin - 3 Yr. Avg. 3.2%
Net Profit Margin 0.3%
Net Profit Margin - 3 Yr. Avg. 1.8%
Effective Tax Rate 21.1%
Eff/ Tax Rate - 3 Yr. Avg. 28.5%
Payout Ratio 336.4%

GPRE stock valuation input parameters

Revenue. Company's revenue (or sales) is always the starting point of any cash flow forecast. In the GPRE stock intrinsic value calculation we used $3843 million for the last fiscal year's total revenue generated by Green Plains, Inc.. The default revenue input number comes from 0001 income statement of Green Plains, 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 GPRE 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 7.2%, whose default value for GPRE is calculated based on our internal credit rating of Green Plains, 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 Green Plains, 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 GPRE stock the variable cost ratio is equal to 70.2%.

Fixed operating expenses is just that - expenses that are not dependant on the volume of production. They are set to $1054 million in the base year in the intrinsic value calculation for GPRE 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 9% for Green Plains, Inc..

Corporate tax rate of 27% is the nominal tax rate for Green Plains, 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 GPRE 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 GPRE are equal to 28.3%.

Life of production assets of 11 years is the average useful life of capital assets used in Green Plains, 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 GPRE is equal to 16.9%. 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 - $946.819 million for Green Plains, 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 41.040 million for Green Plains, 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 Green Plains, Inc. at the current share price and the inputted number of shares is $0.3 billion.

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