Intrinsic value of Heritage-Crystal Clean, Inc. - HCCI

Previous Close

$24.68

  Intrinsic Value

$15.40

stock screener

  Rating & Target

sell

-38%

Previous close

$24.68

 
Intrinsic value

$15.40

 
Up/down potential

-38%

 
Rating

sell

We calculate the intrinsic value of HCCI 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 0.6

 

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, %
  9.70
  9.23
  8.81
  8.43
  8.08
  7.78
  7.50
  7.25
  7.02
  6.82
  6.64
  6.47
  6.33
  6.19
  6.08
  5.97
  5.87
  5.78
  5.71
  5.63
  5.57
  5.51
  5.46
  5.42
  5.37
  5.34
  5.30
  5.27
  5.25
  5.22
Revenue, $m
  450
  491
  535
  580
  626
  675
  726
  778
  833
  890
  949
  1,010
  1,074
  1,141
  1,210
  1,282
  1,358
  1,436
  1,518
  1,604
  1,693
  1,786
  1,884
  1,986
  2,093
  2,205
  2,321
  2,444
  2,572
  2,706
Variable operating expenses, $m
  404
  440
  477
  516
  556
  598
  642
  687
  734
  783
  818
  871
  926
  983
  1,043
  1,105
  1,170
  1,238
  1,309
  1,382
  1,459
  1,540
  1,624
  1,712
  1,804
  1,900
  2,001
  2,107
  2,217
  2,333
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
  404
  440
  477
  516
  556
  598
  642
  687
  734
  783
  818
  871
  926
  983
  1,043
  1,105
  1,170
  1,238
  1,309
  1,382
  1,459
  1,540
  1,624
  1,712
  1,804
  1,900
  2,001
  2,107
  2,217
  2,333
Operating income, $m
  46
  51
  57
  64
  70
  77
  84
  91
  99
  106
  131
  139
  148
  157
  167
  177
  187
  198
  210
  221
  234
  247
  260
  274
  289
  304
  320
  337
  355
  373
EBITDA, $m
  78
  85
  92
  100
  108
  117
  125
  134
  144
  154
  164
  174
  186
  197
  209
  221
  234
  248
  262
  277
  292
  308
  325
  343
  361
  381
  401
  422
  444
  467
Interest expense (income), $m
  2
  2
  2
  3
  3
  4
  4
  5
  5
  6
  7
  8
  8
  9
  10
  11
  12
  12
  13
  14
  15
  16
  17
  19
  20
  21
  22
  24
  25
  27
  28
Earnings before tax, $m
  44
  49
  55
  60
  66
  73
  79
  86
  92
  100
  123
  131
  139
  148
  156
  165
  175
  185
  195
  206
  217
  229
  241
  254
  268
  282
  297
  312
  328
  345
Tax expense, $m
  12
  13
  15
  16
  18
  20
  21
  23
  25
  27
  33
  35
  38
  40
  42
  45
  47
  50
  53
  56
  59
  62
  65
  69
  72
  76
  80
  84
  89
  93
Net income, $m
  32
  36
  40
  44
  48
  53
  58
  62
  67
  73
  90
  96
  102
  108
  114
  121
  128
  135
  142
  150
  159
  167
  176
  186
  195
  206
  216
  228
  240
  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
  381
  417
  453
  492
  531
  573
  616
  660
  707
  755
  805
  857
  911
  968
  1,026
  1,088
  1,152
  1,218
  1,288
  1,360
  1,436
  1,515
  1,598
  1,685
  1,775
  1,870
  1,969
  2,073
  2,182
  2,295
Adjusted assets (=assets-cash), $m
  381
  417
  453
  492
  531
  573
  616
  660
  707
  755
  805
  857
  911
  968
  1,026
  1,088
  1,152
  1,218
  1,288
  1,360
  1,436
  1,515
  1,598
  1,685
  1,775
  1,870
  1,969
  2,073
  2,182
  2,295
Revenue / Adjusted assets
  1.181
  1.177
  1.181
  1.179
  1.179
  1.178
  1.179
  1.179
  1.178
  1.179
  1.179
  1.179
  1.179
  1.179
  1.179
  1.178
  1.179
  1.179
  1.179
  1.179
  1.179
  1.179
  1.179
  1.179
  1.179
  1.179
  1.179
  1.179
  1.179
  1.179
Average production assets, $m
  200
  218
  237
  257
  278
  300
  322
  346
  370
  395
  421
  449
  477
  507
  537
  569
  603
  638
  674
  712
  752
  793
  836
  882
  929
  979
  1,031
  1,085
  1,142
  1,202
Working capital, $m
  45
  50
  54
  59
  63
  68
  73
  79
  84
  90
  96
  102
  109
  115
  122
  130
  137
  145
  153
  162
  171
  180
  190
  201
  211
  223
  234
  247
  260
  273
Total debt, $m
  38
  48
  58
  68
  79
  90
  102
  114
  126
  139
  153
  167
  182
  197
  213
  230
  247
  265
  284
  303
  324
  345
  368
  391
  416
  442
  468
  497
  526
  557
Total liabilities, $m
  103
  113
  123
  133
  144
  155
  167
  179
  191
  205
  218
  232
  247
  262
  278
  295
  312
  330
  349
  369
  389
  411
  433
  457
  481
  507
  534
  562
  591
  622
Total equity, $m
  278
  304
  331
  358
  387
  417
  449
  481
  515
  550
  587
  625
  664
  705
  748
  793
  839
  888
  939
  992
  1,047
  1,105
  1,165
  1,228
  1,294
  1,363
  1,435
  1,511
  1,590
  1,673
Total liabilities and equity, $m
  381
  417
  454
  491
  531
  572
  616
  660
  706
  755
  805
  857
  911
  967
  1,026
  1,088
  1,151
  1,218
  1,288
  1,361
  1,436
  1,516
  1,598
  1,685
  1,775
  1,870
  1,969
  2,073
  2,181
  2,295
Debt-to-equity ratio
  0.140
  0.160
  0.170
  0.190
  0.200
  0.220
  0.230
  0.240
  0.250
  0.250
  0.260
  0.270
  0.270
  0.280
  0.280
  0.290
  0.290
  0.300
  0.300
  0.310
  0.310
  0.310
  0.320
  0.320
  0.320
  0.320
  0.330
  0.330
  0.330
  0.330
Adjusted equity ratio
  0.729
  0.729
  0.729
  0.729
  0.729
  0.729
  0.729
  0.729
  0.729
  0.729
  0.729
  0.729
  0.729
  0.729
  0.729
  0.729
  0.729
  0.729
  0.729
  0.729
  0.729
  0.729
  0.729
  0.729
  0.729
  0.729
  0.729
  0.729
  0.729
  0.729

CASH FLOW

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Net income, $m
  32
  36
  40
  44
  48
  53
  58
  62
  67
  73
  90
  96
  102
  108
  114
  121
  128
  135
  142
  150
  159
  167
  176
  186
  195
  206
  216
  228
  240
  252
Depreciation, amort., depletion, $m
  32
  33
  35
  37
  38
  40
  42
  43
  45
  47
  33
  35
  37
  40
  42
  44
  47
  50
  53
  56
  59
  62
  65
  69
  73
  76
  81
  85
  89
  94
Funds from operations, $m
  64
  69
  75
  81
  87
  93
  99
  106
  113
  120
  123
  131
  139
  147
  156
  165
  175
  185
  195
  206
  217
  229
  242
  254
  268
  282
  297
  312
  329
  346
Change in working capital, $m
  4
  4
  4
  5
  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
  14
Cash from operations, $m
  60
  65
  71
  76
  82
  88
  94
  101
  107
  114
  117
  125
  132
  141
  149
  158
  167
  177
  187
  197
  208
  220
  232
  244
  257
  271
  285
  300
  316
  332
Maintenance CAPEX, $m
  -14
  -16
  -17
  -19
  -20
  -22
  -23
  -25
  -27
  -29
  -31
  -33
  -35
  -37
  -40
  -42
  -44
  -47
  -50
  -53
  -56
  -59
  -62
  -65
  -69
  -73
  -76
  -81
  -85
  -89
New CAPEX, $m
  -18
  -18
  -19
  -20
  -21
  -22
  -22
  -23
  -24
  -25
  -26
  -27
  -28
  -30
  -31
  -32
  -33
  -35
  -36
  -38
  -40
  -41
  -43
  -45
  -47
  -50
  -52
  -54
  -57
  -60
Cash from investing activities, $m
  -32
  -34
  -36
  -39
  -41
  -44
  -45
  -48
  -51
  -54
  -57
  -60
  -63
  -67
  -71
  -74
  -77
  -82
  -86
  -91
  -96
  -100
  -105
  -110
  -116
  -123
  -128
  -135
  -142
  -149
Free cash flow, $m
  28
  31
  34
  38
  41
  44
  48
  52
  56
  60
  60
  64
  69
  74
  79
  84
  89
  95
  101
  107
  113
  120
  126
  133
  141
  149
  157
  165
  174
  183
Issuance/(repayment) of debt, $m
  9
  10
  10
  10
  11
  11
  12
  12
  13
  13
  14
  14
  15
  15
  16
  17
  17
  18
  19
  20
  21
  21
  22
  23
  25
  26
  27
  28
  29
  31
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  
  9
  10
  10
  10
  11
  11
  12
  12
  13
  13
  14
  14
  15
  15
  16
  17
  17
  18
  19
  20
  21
  21
  22
  23
  25
  26
  27
  28
  29
  31
Total cash flow (excl. dividends), $m
  37
  41
  44
  48
  52
  56
  60
  64
  69
  73
  74
  79
  84
  89
  95
  101
  107
  113
  120
  126
  134
  141
  149
  157
  165
  174
  184
  193
  204
  214
Retained Cash Flow (-), $m
  -25
  -26
  -27
  -28
  -29
  -30
  -31
  -33
  -34
  -35
  -37
  -38
  -40
  -41
  -43
  -45
  -47
  -49
  -51
  -53
  -55
  -58
  -60
  -63
  -66
  -69
  -72
  -76
  -79
  -83
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
  13
  15
  18
  20
  23
  26
  28
  32
  35
  38
  37
  41
  44
  48
  52
  56
  60
  64
  69
  73
  78
  83
  88
  94
  99
  105
  111
  118
  124
  131
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
  12
  14
  15
  17
  18
  19
  19
  20
  20
  20
  18
  17
  17
  16
  15
  14
  13
  12
  11
  9
  8
  7
  6
  5
  4
  3
  2
  2
  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

Heritage-Crystal Clean, Inc. provides full-service parts cleaning, containerized waste management, used oil collection, vacuum truck services and antifreeze recycling. The Company owns and operates a used oil re-refinery. The Company operates through two segments: Environmental Services and Oil Business. The Company provides hazardous and non-hazardous waste services to small and mid-sized customers in both the manufacturing and vehicle maintenance sectors. The Environmental Services segment consists of the Company's parts cleaning, containerized waste management, vacuum truck services, used antifreeze recycling activities and field services. The Oil Business segment consists of used oil collection activities, sale of recycled fuel oil, re-refining activities, and oil filter removal and disposal services. Through its re-refining process, the Company recycles used oil into lubricant base oil and by-products, and it is a supplier to firms that produce and market finished lubricants.

FINANCIAL RATIOS  of  Heritage-Crystal Clean, Inc. (HCCI)

Valuation Ratios
P/E Ratio 91.7
Price to Sales 1.6
Price to Book 2.8
Price to Tangible Book
Price to Cash Flow 14.5
Price to Free Cash Flow 25
Growth Rates
Sales Growth Rate -0.6%
Sales - 3 Yr. Growth Rate %
EPS Growth Rate %
EPS - 3 Yr. Growth Rate %
Capital Spending Gr. Rate -20%
Cap. Spend. - 3 Yr. Gr. Rate -2.3%
Financial Strength
Quick Ratio 5
Current Ratio 0.1
LT Debt to Equity 28.3%
Total Debt to Equity 31.8%
Interest Coverage 6
Management Effectiveness
Return On Assets 2.4%
Ret/ On Assets - 3 Yr. Avg. 0.2%
Return On Total Capital 2.3%
Ret/ On T. Cap. - 3 Yr. Avg. -0.2%
Return On Equity 3.1%
Return On Equity - 3 Yr. Avg. -0.1%
Asset Turnover 1.1
Profitability Ratios
Gross Margin 0%
Gross Margin - 3 Yr. Avg. 0%
EBITDA Margin 8.3%
EBITDA Margin - 3 Yr. Avg. 5.2%
Operating Margin 3.2%
Oper. Margin - 3 Yr. Avg. 0.5%
Pre-Tax Margin 2.6%
Pre-Tax Margin - 3 Yr. Avg. 0.1%
Net Profit Margin 1.7%
Net Profit Margin - 3 Yr. Avg. -0%
Effective Tax Rate 33.3%
Eff/ Tax Rate - 3 Yr. Avg. 37.8%
Payout Ratio 0%

HCCI stock valuation input parameters

Revenue. Company's revenue (or sales) is always the starting point of any cash flow forecast. In the HCCI stock intrinsic value calculation we used $410 million for the last fiscal year's total revenue generated by Heritage-Crystal Clean, Inc.. The default revenue input number comes from 0001 income statement of Heritage-Crystal Clean, 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 HCCI stock valuation model: a) initial revenue growth rate of 9.7% 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 HCCI is calculated based on our internal credit rating of Heritage-Crystal Clean, 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 Heritage-Crystal Clean, 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 HCCI stock the variable cost ratio is equal to 90.2%.

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 HCCI 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 Heritage-Crystal Clean, Inc..

Corporate tax rate of 27% is the nominal tax rate for Heritage-Crystal Clean, 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 HCCI 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 HCCI are equal to 44.4%.

Life of production assets of 12.8 years is the average useful life of capital assets used in Heritage-Crystal Clean, 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 HCCI is equal to 10.1%. 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 - $253.583 million for Heritage-Crystal Clean, 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 23.118 million for Heritage-Crystal Clean, 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 Heritage-Crystal Clean, Inc. at the current share price and the inputted number of shares is $0.6 billion.

RELATED COMPANIES Price Int.Val. Rating
VTNR Vertex Energy, 1.43 0.16  str.sell
CLH Clean Harbors, 69.39 37.05  sell
ECOL US Ecology, In 56.79 72.87  buy

CONTACT US       ASSET ALLOCATION

About X-FIN       Privacy policy       Terms of use       FAQ

Copyright © X-FIN.com 2005-2019. All rigths reserved.